Sri Lanka, India sign USD 500 Million credit line agreement for petroleum purchases

Sri Lanka, India sign USD 500 Million credit line agreement for petroleum purchases

The Export-Import Bank (EXIM) of India and the Government of Sri Lanka today (February 02) signed a USD 500 million Short-Term Line of Credit (STLOC) agreement for the purchase of petroleum products.

It was inked by Secretary to the Treasury, S.R. Attygalle from the Sri Lankan side and Chief General Manager of EXIM Bank, Gaurav Bhandari from the Indian side, the High Commission of India in Colombo said in a statement.

The deal was put into effect in the presence of Sri Lanka’s Finance Minister Basil Rajapaksa and Indian High Commissioner to Sri Lanka, Gopal Baglay.

Indian government’s support for fuel imports by Sri Lanka from India, through the LOC of USD 500 million, is in response to Sri Lankan government’s urgent requirement. This critical support comes in the wake of a virtual meeting between the External Affairs Minister of India Dr. S. Jaishankar and Sri Lanka’s Finance Minister Basil Rajapaksa on January 15, 2022, during which they discussed a range of issues.

“As Sri Lanka’s closest neighbour and long-standing partner, India is committed to assist Sri Lanka in its post-Covid economic recovery. Signing of the LOC Agreement is another landmark in our bilateral cooperation and is in continuation of India’s recent foreign exchange support of over USD 900 million to Sri Lanka,” the Indian High Commission said further in its statement.

It added that these measures are in line with the discussions between the two sides during the visit of Minister Basil Rajapaksa to India in December 2021.

With the recent support, India’s overall development assistance to Sri Lanka stands close to USD 4 billion.

With regard to the signing of the agreement, Sri Lanka’s Finance Ministry said this short-term credit line will be utilized for financing the importation of petroleum products from India, thereby meeting the energy requirements of the country amidst significant liquidity shortage prevailing in the domestic foreign exchange market.

“On the other hand, this will be an aid until the foreign currency inflows to country become favourable during the recovery process,” it said further.

“The Government of India is one of the major development partners of Sri Lanka. The Government of India has provided the first credit facility to Sri Lanka by extending Indian Rs 46.35 million worth of import commodity loan in 1973. Currently, Indian development assistance flows by the ways of loans, grants and technical assistance, mainly focusing on improvement of economic infrastructural facilities, livelihood development, education, healthcare, capacity building and economic renewal.”

(Source: Ada Derana)