India’s timely aid saves Sri Lanka from economic crisis

Due to severe shortage of oil, gas, medicine and foodstuffs due to shortage of foreign exchange, Sri Lanka was going through a huge economic crisis, however, India’s timely aid saved the country. Emerald Isle.

According to reliable sources, India over the past six months has provided multi-pronged assistance to its smaller neighbor to overcome its economic crisis.

Aid from India over the past six months has taken the form of; a $500 million oil line of credit; $1 billion in lines of credit for essential commodities to be imported from India under negotiation; USD 400 million currency swap; Carryover of USD 515 million under the Asian Customs Clearance Union; 40,000 MT of fuel on credit; 100,000 rapid antigen test kits and supply of 1,000 tons of liquid medical oxygen, Daily FT reported.

India should urgently expand a food and health security program in Sri Lanka, as well as an energy security program and a currency exchange, and also boost Indian investment.

The food and health security program would consider extending a line of credit to cover the importation of food, medicine and other essential items from India.

It is said that the energy package would also include a line of credit to cover the import of fuel from India and a rapid upgrade of the Trincomalee oil tank farm.

The disaster was partly man-made because, as former CBSL Deputy Governor Dr. Wijewardana pointed out, “The government made serious policy mistakes when it announced tax relief attractive and unsolicited for taxpayers.The consequence of this extraordinary monetary growth has been the buildup of inflationary pressures in the national economy on the one hand, and the depletion of foreign exchange reserves pushing the rupee to depreciate on the market, on the other,” the Daily FT reported.

The rest of the crisis was due to the massive fall in tourism-related income in 20/21, heavy debt repayments and increased pandemic-related spending. The result of all this was that 500,000 people according to the World Bank fell below the poverty line, while food inflation reached 21%.

Moreover, the problems of oil-dependent Sri Lanka have worsened further with soaring oil prices despite new measures by the United States and the EU aimed at calming markets troubled by the invasion of the oil. ‘Ukraine.

According to published data, Lanka’s oil bill in 2021 has increased by 50% compared to last year, Daily FT reported.

Indian aid at present is timely and impactful on several fronts. Sri Lanka would definitely need more help from them to roll in 2022.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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