Colombo: A Sri Lankan official stated that India has extended a $1bn credit line for Sri Lanka by one year, giving the crisis-hit island nation a backup infusion of dollars for essential imports.
The credit line is a part of about $4bn in emergency assistance extended by India during the peak of Sri Lanka’s financial crisis early last year. It was scheduled to end in March.
After the negotiations, the credit line was extended until March 2024, Sri Lanka’s Deputy Treasury Secretary Priyantha Rathnayake said.
“There is about $350m left of the credit line that can be utilised as and when needed,” he said. He added, “However, given the increase of foreign exchange availability in the market, the need is not as keen as it was last year.”
The announcement came as Sri Lanka’s creditor nations are preparing for their first meeting later to coordinate the restructuring of the nation’s debt. The focus is turning to whether China will attend.
The online meeting will be held within a new framework launched in Washington, DC in April that creditors hope will serve as a model to resolve the debt difficulties of middle-income economies.
Japan, which initiated the launch together with India and France, has invited all bilateral creditors, including the largest, China, though Japanese officials said it was uncertain whether it would join the talks.
Last month, France, India and Japan unveiled a common platform for talks among bilateral creditors to coordinate the restructuring of Sri Lanka’s debt.