Sri Lanka’s finance minister travels to New Delhi to hold talks on further aid

Sri Lanka’s Finance Minister Basil Rajapaksa will visit New Delhi later this month, Indian authorities said after his phone call with Foreign Minister Jaishankar on Monday amid a severe economic crisis choking the island nation.

“EAM @DrSJaishankar and the Honorable Minister of Finance @RealBRajapaksa had a productive and heartfelt phone conversation some time ago. EAM assured #India will continue to support #SriLanka in all possible ways. They agreed to set a mutually convenient date for Hon’ble @RealBRajapaksa to visit #India in the second half of this month,” India’s High Commission said in a tweet Monday night.

As of January, India has provided assistance totaling over US$1.4 billion to Sri Lanka through a US$400 million currency swap, a US$500 million loan deferral and a line of credit of $500 million for fuel imports.

Another $1 billion in aid currently under negotiation is “accelerating” and is in the “final stages” before likely confirmation during the minister’s visit, diplomatic sources said Peppystores.

This would be Mr Rajapaksa’s second visit amid Sri Lanka’s unprecedented economic crisis, marked by fuel and food shortages and lengthy power outages across the country. He was in India in early December when the two countries agreed on a four-pronged plan that included emergency credit lines and a currency swap to boost Sri Lanka’s rapidly dwindling foreign exchange reserves.

Peppystores explains: Sri Lanka’s looming economic crisis

For months, Sri Lanka has been short of funds and does not have enough dollars to pay for the import of even essential goods. Despite sweeping import restrictions imposed by the government to save dollars, the island nation is struggling to cope and the Rajapaksa government is exploring various avenues for urgent aid.

Late on Monday, the Sri Lankan central bank devalued the rupee by 15% and set an exchange rate limit of LKR 230 against the dollar, raising it from 200 to 203 which has been in place since October 2021.

Colombo is awaiting official word on a possible visit by Prime Minister Narendra Modi and Mr. Jaishankar for the Sri Lanka-hosted BIMSTEC Summit in Colombo.

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