Express press service

NEW DELHI: As Sri Lanka reels from a severe financial crisis, its finance minister Basil Rajapaksa has reached out to India for a bailout in the form of a line of credit. Rajapaksa is on his second visit to India in four months.

The Finance Minister, along with Sri Lanka’s High Commissioner to India, Milinda Moragoda, met Prime Minister Narendra Modi on Wednesday.

Sri Lanka is hoping for an additional $1 billion line of credit from India. In February, the Export Import Bank of India (Exim) extended a $500 million line of credit for the purchase of petroleum products as petrol stations in Sri Lanka ran out. In total, the Exim Bank has extended 10 lines of credit to the Sri Lankan government on behalf of the Indian government. This brought the total value of the credit lines to $2.18 billion, according to a statement from Exim Bank.

Rajapaksha is due to meet External Affairs Minister Dr S Jaishankar later today. With a low influx of tourists and rapidly depleting economic reserves, Sri Lanka has had to take initiatives like turning off streetlights at night to save energy.

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In a recent order, Rajapaksa ordered all streetlights to be turned off until the end of March.

According to government data, China accounted for about 10% of Sri Lanka’s $35 billion external debt through April 2021. However, experts believe China’s total lending could be much higher if the loans to public enterprises and to Sri Lanka are taken into account. Central bank.

The country official reserves fell to $2.36 billion in January 2022 compared to $3.1 billion in December 2021. Colombo’s next big challenge is the repayment of a $1 billion bond maturing in July 2022. To get out of this crisis, the most pragmatic option of Sri Lanka would be to reschedule its external debt. Delaying capital payments would allow the country to build reserves and pay for essential imports, including food.

(With ANI inputs)