India has reaffirmed its strong commitment to supporting Sri Lanka’s economic stabilization, recovery, and long-term growth by playing a pivotal role in the country’s debt restructuring process. Through a series of financial initiatives, India has emerged as a key partner in helping its neighboring nation navigate the economic crisis.
The India Exim Bank has taken significant steps to facilitate Sri Lanka’s financial stability by extending seven Government of India Letters of Credit (GOILOCs), with a total aggregate value of $718.12 million. These Letters of Credit have been supplemented by the Buyer’s Credit Programme under the National Export Insurance Account (BC-NEIA), underscoring India’s consistent effort to provide immediate and sustained financial support to Sri Lanka.
In addition, the debt restructuring process for Sri Lanka has been facilitated under the Common Forum, co-chaired by India, Japan, and France, operating under the broader framework of the Paris Club. This forum has served as a crucial platform to address the country’s debt challenges by fostering international cooperation and collaboration among creditors.
India’s proactive role in co-chairing the debt restructuring negotiations has been instrumental in paving the way for the approval of the third disbursement under the International Monetary Fund’s (IMF) Extended Fund Facility (EEF) programme, which was granted on March 20, 2023. This approval signifies a major milestone in Sri Lanka’s journey toward economic recovery, as it enables the country to access critical funds needed for stabilizing its economy.
The sustained and extensive contributions from India demonstrate a broader strategic approach towards ensuring Sri Lanka’s return to a sustainable path of economic growth. By prioritizing regional cooperation and financial assistance, India has emerged as a steadfast partner in Sri Lanka’s efforts to overcome its economic challenges and rebuild a stable economic future.