Home Economy India Determines No More Funding For Sri Lanka

India Determines No More Funding For Sri Lanka

India Determines No More Funding For Sri Lanka

India does not plan to provide new financial support to Sri Lanka on top of the nearly $4 billion it has expanded in 2023, as the island’s battered economy starts to stabilize after a preliminary loan agreement with the IMF. India has been the largest aid provider in 2022 to its southern neighbor, fighting its worst economic crisis in more than seven decades and fighting to pay for imports, although the situation now is less complicated than it was between May and July of 2022. The article is about India Determines No More Funding For Sri Lanka.

“We have already given $3.8 billion worth of assistance. Now it’s all about the IMF,” an Indian government source with direct knowledge of discussions with Sri Lanka told Reuters. “Countries can’t keep assisting.” A Sri Lankan government source said India’s decision was not a surprise, and New Delhi had “signaled” to them a few months ago that there would be little further large-scale support forthcoming.

The source stated that India would be invited to a donor conference that Sri Lanka was planning to hold with Japan, China, and possibly, South Korea later in 2022. However, another Sri Lankan government source said that conversation between India and Sri Lanka for a $1 billion swap arrangement and its request for a second $500 million credit line to purchase fuel, made in May, had made little headway. The sources declined to be named since they were not authorized to speak to the media.

India’s finance ministry, Sri Lanka’s Finance Ministry, and its central bank did not immediately respond to requests for comment. Sri Lanka and the IMF reached a preliminary agreement in early September for a loan of about $2.9 billion, contingent on the country receiving financing assurances from official creditors and negotiations with private creditors. “Our focus is more on taking forward the IMF program and getting ourselves out of this mess on our own,” said Sri Lankan sources.

Sri Lanka has used its limited foreign exchange reserves to meet fuel imports and reallocate funding from multilateral agencies for other critical substances, including fertilizer, cooking gas, and medicine, said the other Sri Lankan source. The country of 22 million people has been battling shortages of essentials, including fuel, food, and medicines, for months after its foreign exchange reserves dropped to record lows, stalling imports and stoking unprecedented public unrest.

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