To help meet an acute forex shortage
In response to Sri Lanka’s immediate requirement of foreign exchange, India on Thursday allowed the Central Bank of Sri Lanka (CBSL) to defer the payment of about US$500 million given under the Asian Clearing Union Settlement Framework.
This was conveyed to the Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal by the Indian High Commissioner Gopal Baglay on Thursday.
In addition to this, there is a US$400 million currency swap between the two countries. In total, India has extended to Sri Lanka forex support of more than US$900 million.
These are among the four pillars of bilateral economic cooperation identified during Sri Lankan Finance Minister Basil Rajapaksa’s visit to New Delhi in December 2021.
Indian sources said that this is a manifestation of India’s continued support to Sri Lanka. On January 6, Indian External Affairs Minister Dr. S Jaishankar had tweeted that India will support Sri Lanka “during these difficult times” after a phone conversation with his Sri Lankan counterpart, Prof. G.L Peiris.
Sri Lanka has been extended a US$1.9 billion aid package by India, that includes facilities to acquire petroleum, medicines and food from India. Work on the other pillars of support announced after Basil Rajapaksa’s visit is in progress.