Sri Lanka is discussing more aid from New Delhi during Indian Foreign Minister S. Jaishankar’s ongoing visit to the island nation, according to people familiar with the matter.
The additional financial support being sought was for more import credit from Sri Lanka’s larger neighbor, one of the people said, asking not to be identified as the talks are private. India’s total support to Sri Lanka to overcome its foreign exchange crisis that has led to shortages of food, fuel, and medicine could reach as much as $5 billion, the person added.
"Discussed the economic situation and India’s supportive response,” Jaishankar said in a tweet after meeting Sri Lankan Finance Minister Basil Rajapaksa Monday. "We will continue to be guided by Neighborhood First.”
Jaishankar is seeking to bolster ties with India’s neighbors and rein in China’s influence in the region. Just days after India extended a $1 billion credit line to Sri Lanka, China’s envoy to the nation said it is considering up to $2.5 billion in fresh assistance to the island.
Apart from the $1 billion credit line for importing food, medicine and other essentials, India has also previously extended $500 million financing to import fuel. The two nations’ central banks have entered a $400 million swap, while New Delhi has deferred over $500 million of Asian Clearing Union settlements, among other items of financial support.
Sri Lanka has also started talks with the International Monetary Fund for a potential aid package as its foreign exchange reserves shrink and it struggles to import basic goods.
