India’s economic aid package to arrive in SL this month

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The “urgent” economic relief package from India to assist Sri Lanka amidst its worsening economic crisis is arranged to be received within this month, The Sunday Morning Business learns.

Speaking to us, Treasury Secretary S.R. Attygalle stated that Sri Lanka expects to receive the aid package from the neighbouring country as soon as possible, as it includes support on foreign reserves, imports, petroleum imports, and other much needed economic assistance.

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“They (India) have to get their clearances, Cabinet approvals, etc. Once cleared at the top, the bureaucracy has to work. Therefore, I can’t tell the exact date, but it will work out in January,” Attygalle said.

When inquired regarding the worth of the package or what the aid package will include (other than the aforementioned details), Attygalle refused to divulge information as the Government of India is yet to grant approval.

On 10 December 2021, the Economic Times newspaper, citing officials that it didn’t identify, mentioned that India is expected to extend a food and health security package to Sri Lanka on an urgent basis, along with an energy security package and a currency swap, and is also expected to push Indian investments.

The newspaper quoted an official as saying: “The food and health security package would envisage the extension of a line of credit to cover the import of food, medicines, and other essential items from India. The energy package would also comprise a line of credit to cover the import of fuel from India and an early modernisation of the Trincomalee Oil Tank Farm. There is also an offer of a currency swap to help Sri Lanka address its current balance of payment issues.” 

It further noted that the both sides have “identified ways and means through which the existing bilateral economic relationship between the two countries could be further broadened and deepened,” citing a statement from the Sri Lankan Government.

Sri Lanka’s ties with India, its closest neighbour, span over 2,500 years. India developed closer relations with Sri Lanka during the final stage of Sri Lanka’s civil war, as India supported the Sri Lankan Government’s right to act against terrorist forces. Sri Lanka has long been a priority destination for direct investment from India and is one of India’s largest trading partners in the South Asian Association of Regional Co-operation (SAARC).

Sri Lanka is also among the major recipients of development assistance from the Indian Government. As of 2020, according to Sri Lanka’s Ministry of Foreign Affairs, India’s overall commitment to Sri Lanka stands close to $ 3 billion, out of which around $ 560 million is purely in grants. The most notable projects by India in Sri Lanka are the 1990 Emergency Ambulance Service and passenger coaches for Sri Lanka’s Railway Department.

Meanwhile, along with several other bilateral and multilateral negotiations at present, discussions with India are also being held based on potential investment opportunities with regard to establishing a pharmaceutical zone in Arabokka and a textile zone in Eravur.

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