The Sri Lankan government was handed a much-needed financial reprieve earlier today when India agreed to a deferment of US$500 million and currency swap of US$400 million, as an economic crisis on the island worsens.
The announcement, made today after the Indian High Commissioner in Colombo met Sri Lanka’s Central Bank governor, comes following repeated requests for financial assistance from Sri Lanka.
“High Commissioner met governor of central bank of Sri Lanka and expressed India’s strong support to Sri Lanka in the wake of Reserve Bank of India (RBI) extending over USD 900 million facilities over the last week,” tweeted the Indian High Commission.
“These comprise deferment of Asian Clearing Union settlement of over USD 500 million and currency swap of USD 400 million.”
Though the announcement will give Colombo some desperately needed breathing space, larger problems still loom. Sri Lanka has to repay approximately US$4.5bn in debt this year – including a US$500m international sovereign bond, which matures on 18 January.
Earlier this month, the World Bank reported that an estimated 500,000 people have fallen below the poverty line since the start of the pandemic and with the price of basic goods skyrocketing, bread shortages and power cuts reported.
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