India will extend another $500 million line of credit for crisis-hit Sri Lanka for the purchase of fuel, the country’s Foreign Minister G L Peiris said, as the existing line of credit for fuel is expected to get exhausted by month's end. It will bring New Delhi’s total assistance to the island country to around $2.9 billion.

Gripped by a severe economic crisis, Sri Lanka has been running low on its foreign exchange reserves for months now, leaving the government struggling to import basic essentials like food, fuel, and medicine. So far this year, India has extended lines of credit worth $1.5 billion to cover the import of essentials.

The government has already engaged with the International Monetary Fund (IMF), seeking around $4 billion in assistance to stabilize the economy hit hard by the crippling shortage of foreign exchange reserves. However, the release of assistance from the lender is expected to take around six months, informed Peiris.

The country will need bridge financing of around $3 billion till the IMF finalizes its aid package. Talks are already underway with India and China for raising the money. Significantly, Bangladesh is expected to postpone the repayment of around the $450 million currency swap facility that it had extended to Sri Lanka.

Meanwhile, China has announced that it will soon send humanitarian assistance to Sri Lanka. The Chinese Embassy in Colombo confirmed that details of the assistance will be announced soon.

China has noticed Sri Lanka’s economic difficulties and as a traditional friendly neighbor to Sri Lanka, the Chinese government has decided to provide emergency humanitarian assistance to the country to help it cope with the current difficulties, Xu Wei, the spokesperson for China International Development Cooperation Agency, was quoted as saying by Xinhua news agency. 

(SAM)