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India to lend $900 Million aid to Sri Lanka to overcome economic crisis

15/01/2022 at 9:54 PM

New Delhi, Jan 15: India has reportedly extended an assistance of US $900 million to neighbour Sri Lanka that is going through a severe foreign reserve crunch

Indian High Commissioner to Sri Lanka Gopal Baglay met Sri Lanka’s central bank Governor Ajith Nivard Cabraal on Thursday where they discussed about the provisions through the aid will be provided.

The $900 million aid comes in the form of a $400 million currency swap and deferment of over $500 million due for settlement to the Asian Clearing Union (ACU).

“High Commissioner met Gov @CBSL and expressed #India’s strong support to #SriLanka in the wake of @RBI extending over USD 900 mn facilities over the last week.These comprise deferment of Asian Clearing Union settlement of over USD 500 mn and currency swap of USD 400 mn” Indian High Commission in Sri Lanka said in a tweet.

Cabraal also took to Twitter to confirm and acknowledge the currency swap and other assistance. 

“Had an excellent discussion with Indian High Commissioner to #SriLanka HE Gopal Baglay at my office this morning where he confirmed the #SAARC #SWAP by RBI and other forms of bilateral cooperation,” he posted.

The RBI had extended a similar swap of $400 million to Sri Lanka when it was facing the first wave of Covid pandemic in July 2020.

Sri Lanka is under a severe foreign reserve crunch as the island nation has over $7 billion outstanding debt this year, starting with $500 million International sovereign bonds maturing on January 18.

India’s latest aid comes a week after it signed an agreement with Sri Lanka on jointly developing the Trincomalee oil tank farm along the north-eastern coast.

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