(MENAFN – NewsIn.Asia)
Colombo, Jul 5 (ECONOMYNEXT): India became Sri Lanka’s top lender in early 2022, according to official data, as the neighbor stepped in with emergency funding as the island grappled with the worst monetary crisis in its history.
Up to April 2022, India had disbursed US$376.9 million, mainly a line of credit for oil imports compared to US$13 million last year.
Sri Lanka has signed $1,550.4 million in new loans through April 2022, including $1.5 billion from India, according to a finance ministry report.
Sri Lanka is facing severe currency shortages after a peg’s credibility was lost through cash injections and an attempted float with a buy-back rule in place failed and is unable to fund large bills import.
However, rates have since been raised and private credit is slowing, giving more resources to finance a deficit and pay state workers, although the sharp collapse of the currency is destroying real savings.
The Asian Development Bank has disbursed US$359.6 million through April 2022, up from US$113.6 million last year.
China has disbursed US$67.9 million through April 2022, up from US$514.9 million a year ago.
Last year, China provided a budget support loan of US$500 million.
Many Chinese projects are coming to an end.
Sri Lanka had committed an undisbursed loan balance of US$8.05 billion, which relates to projects over the next 3-5 years.
India has the majority of the balance to be disbursed, followed by the Asian Development Bank, the World Bank, China and Japan.
Sri Lanka defaulted on its external debt in April 2020.
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