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Reuters: India is ready to support Sri Lanka 2 billion USD

Reuters: India is ready to support Sri Lanka 2 billion USD - Photo 1.

Drivers wait in line to buy gasoline in Colombo, Sri Lanka, on April 12 – Photo: REUTERS

On April 12, Sri Lanka declared default on its entire foreign debt worth 51 billion USD.

The country has to pay off $4 billion of its foreign debt this year, including $1 billion in international government bonds maturing in July 2022. However, Sri Lanka’s foreign exchange reserves are only about 1.93 billion USD, as of the end of March 2022.

Sri Lanka has asked friendly countries like China and India for financial support.

On April 13, a Reuters source from New Delhi said that Sri Lanka’s default was worrisome, but India “can still provide swaps and support up to $2 billion”.

The Indian government and banks, as well as the finance and foreign ministries of Sri Lanka, have not yet commented on this information.

In March, India and Sri Lanka signed a concessional loan agreement worth $1 billion. Sri Lanka will use the credit to pay for food, medicine and other essential items.

On the morning of April 13, China affirmed that it would do its best to help Sri Lanka. Beijing is considering a $2.5 billion credit package for the South Asian country.

One of the Reuters sources said New Delhi is keen on its southern neighbor to limit its dependence on China. Sri Lanka owes China about $3.5 billion and had to agree to let China lease the Hambantota port for 99 years in exchange for $1.2 billion in debt.

“We want them to reduce their debt from China and become closer partners,” the source told Reuters, speaking on condition of anonymity.

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