India’s loans to Sri Lanka: India becomes Sri Lanka’s top lender in 2022: think tank Verite Research

India became Sri Lanka’s top lender in 2022, disbursing $377m in loans to the island nation as it grapples with an unprecedented political crisis and economic turmoil, according to think tank Verite Research. . The Asian Development Bank is following India with $360 million in loans. They represent 76% of total disbursements from January to April 2022.

Out of a total loan disbursement amounting to USD 968 million in the first four months of this year, India, with a contribution of USD 377 million, became Sri Lanka’s largest bilateral lender, Verite Research, a Colombo-based independent interdisciplinary think tank providing strategic analysis and advice for governments and the private sector in Asia, said.

Between 2017 and 2021, China was the largest bilateral lender to Sri Lanka. In 2021, China had provided USD 947 million of which USD 809 million were loans from the China Development Bank.

The AfDB was the largest multilateral donor during the same period.

When Sri Lanka plunged into its worst economic crisis earlier this year, lines of credit from India enabled it to buy fuel and basic necessities.

The Indian High Commission here announced that India’s total credit support to Sri Lanka this year, including currency swaps, stands at nearly $4 billion.

Public protests since late March over economic hardship and shortages of basic necessities saw the ousting of former President Gotabaya Rajapaksa in mid-July.

India provided a dedicated credit line for fuel imports worth $700 million, which ran out at the end of June, leaving huge queues of fuel at petrol stations across the country. ‘Indian Oil Company. The state fuel entity then only provided fuel to the emergency services.

Sri Lanka recently reached an agreement with the IMF for a $2.9 billion loan facility, conditional on Sri Lanka and its creditors agreeing to debt restructuring.

In mid-April, Sri Lanka declared default on its international debt due to the currency crisis.

The country owes $51 billion in foreign debt, of which $28 billion must be paid by 2027.


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