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News: In the visit to Sri Lanka, External Affairs Minister assured to help Sri Lanka to overcome economic and other challenges that occurred because of the pandemic.
What is the economic condition of Sri Lanka?
Sri Lankan economy is in big crisis with a credit crunch, a slump in GDP, foreign reserves that reduced from $7.5 billion in 2019 to $1.6 billion in 2021 and pending debt repayments of more than $7 billion.
Given these conditions, the Sri Lankan president has to make a tough decision in the coming weeks, whether to service debts to bonds with an instalment of $500 million or leave it to default for the first time ever.
|Read here: Sri Lanka’s economic crisis: Challenges for India – Explained, pointwise|
What are the issues in India-Sri Lanka relations?
1) Fisherman issue 2) Pending political solution for war-torn Tamil areas. 3) Concerns over Sri Lanka strategic ties with China.
|Also read: China-Sri Lanka ties: Chinese Foreign Minister’s Sri Lanka visit highlighted Beijing’s relentless drive in Indian Ocean region, and India’s challenge|
What steps were initiated by the Indian government to help Sri Lanka?
-India decided on a “four-pronged” initiative” which includes Lines of Credit towards the import of fuel, food and medicines, currency swap and debt deferrals from India to Sri Lanka.
– MOU has been signed on the Trincomalee project after a decade of delays.
– India has extended $400 million under the “SAARC currency swap” arrangement.
– India agreed to a partial deferral of a $500 million settlement from Sri Lanka by two months.
– The $1.5 bn LoC for essential imports is in process.
Source: This post is based on the article “Friend in need: On India-Sri Lanka ties” published in The Hindu on 17th January 2022.