Sri Lanka Prime Minister Mahinda Rajapaksa has expressed gratitude to Prime Minister Narendra Modi for providing economic development assistance and credit facilities to his country reported local media.
Rajapaksa added that he expects the Indian government to pay special attention to the development of Sri Lanka, reported Daily Mirror. The financial assistance from India comes as the immediate neighbour Sri Lanka is facing a severe economic crisis with electricity blackouts and a shortage of food and essential goods.
Sri Lanka on Thursday signed USD 1 billion credit line with India for procurement of food, medicines and other essential items.
The agreement was signed between the State Bank of India (SBI) and the Government of Sri Lanka, during Sri Lankan Finance Minister Basil Rajapaksha’s two-day visit to India.
Analysts say that foundations have been laid for improving relationships with its immediate neighbours within the SAARC community. Though India has attempted to better relations between the countries, neighbours like Pakistan rebuffed these overtures to further fall into the debt trap of the Chinese government.
While Sri Lanka also signed numerous similar agreements with China, it was quick to understand after the Hambantota debacle that these wide cast loans at negligible interests were a debt trap.
At this critical juncture, Sri Lanka sought Indian support. As has been the case at different times, India intervened to help Sri Lanka tide over the immediate difficulties with a series of economic package announcements like a USD 1 billion line of credit, a currency swap arrangement of USD 400 million and a debt deferral of USD 515 million for two months.
These announcements were necessary for Colombo to escape from the debt trap of loans that China had cast through numerous contractual agreements. Additionally, these would help in the purchase of essential food items, pharmaceutical products and oil for the beleaguered Sri Lankan nationals, who are facing severe economic hardships.