Sri Lanka is facing its worst economic crisis. Sri Lanka, with a population of 22 million, is in bad shape due to lack of foreign exchange. Life is disturbed due to acute shortage of food, medicine and petrol and diesel.
India has emerged as the largest lender to Sri Lanka in the first four months of 2022. India gave a loan of $ 376.9 million to Sri Lanka in these four months. At the same time, China has given a loan of only $ 67.9 million to Sri Lanka. The island nation of Sri Lanka is grappling with its worst ever economic crisis. The condition of Sri Lanka with a population of 22 million is bad due to lack of foreign exchange. Life is disturbed due to acute shortage of food, medicine and petrol and diesel.
Last month, Sri Lanka defaulted on repayment of foreign debt and its inflation has risen by almost 50%. The deteriorating economic situation triggered massive protests that led to President Gotabaya Rajapaksa fleeing the country and resigning from his post.
According to the report of the newspaper Daily Mirror, India tops the list of lenders in terms of money disbursed in the first four months of 2022 i.e. till April 30. The Asian Development Bank (ADB) was the second largest lender in the period with $359.6 million. It is followed by the World Bank which has given a loan of $ 67.3 million to Sri Lanka.
The paper described the loan given by China as “minor”. India came to its rescue when Sri Lanka started facing severe foreign exchange crunch earlier this year, the report said. In the first four months of 2022, Sri Lanka has received foreign loans of $968.1 million, including a grant of $0.7 million.
The full package of India’s foreign aid to Sri Lanka from the beginning of 2022 is included. India extended loans to Sri Lanka for emergency purchases of fuel, food and medicines, pushed forward Asian Clearing Association payments and a currency swap. India had a currency swap worth $3.8 billion with Sri Lanka.
The report said, “When Sri Lanka was facing dollar crunch since the beginning of the year, India came forward as its biggest helper under Prime Minister Narendra Modi’s ‘neighborhood first policy’. If the loan was not given to get out of the shortage, then India came forward.
“Despite widespread expectations, China has shown reluctance to come to Sri Lanka’s rescue,” the report said. China has also not unlocked its $1.5 billion-equivalent yuan swap line with the Central Bank of Sri Lanka for use. That is, Sri Lanka could not swap currency with China. China was until recently Sri Lanka’s largest bilateral funding partner.
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