Informist, Thursday, May 19, 2022

MUMBAI – The Reserve Bank of India today said that trade transactions with Sri Lanka, falling under the State Bank of India’s credit facility arrangement, may be settled in rupee terms.

On Mar 17, SBI signed an agreement with Sri Lanka to provide its government with a credit facility of $1 bln, guaranteed by the government of India, to procure food, medicine, and other essential items. The island nation is grappling with a severe debt crisis.

In April, the Sri Lankan government announced that it will default on all its external debt pending a bailout from the International Monetary Fund.

India has been assisting Sri Lanka through its debt crisis. In February, the island nation purchased, on an urgent basis, 40,000 tn of petrol and diesel from Indian Oil Corp Ltd. This followed a $500-mln credit line agreement between Sri Lanka and India for emergency fuel purchases by the former. India had also announced a $900-mln loan to Sri Lanka in January.

Sri Lanka’s foreign exchange reserves have hit an all-time low and the country is struggling to pay for imports. The jump in international crude oil and fuel prices in the wake of the Russia-Ukraine conflict has exacerbated the crisis for the country.

End

US$1 = 77.7250 rupees

Reported by Richard Fargose

Edited by Shirsha Thakur

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