India finalises cooperation plan to revive Covid-hit Sri Lanka economy

What is the news?

India and Sri Lanka have agreed to a four-pronged package comprising initiatives on food and energy security to help mitigate Sri Lanka’s economic crisis.

What is the four-pronged package that has been finalised between India & Sri Lanka?

1). Urgent food and health security package that includes an extension of a line of credit to cover the import of food, medicines and other essential items from India to Sri Lanka

2). Energy security package that includes a line of credit to cover the import of fuel from India, and early modernisation of the Trincomalee Tank Farm;

3). Offer of a currency swap to help Sri Lanka address its balance of payment issues;

4). Facilitation of Indian investments in different sectors that would contribute to growth and expand employment

What are the recent economic issues between India and Sri Lanka?

One, The Rajapaksa Government has favoured Chinese companies on projects that it expedites. For instance, the projects to develop oil infrastructure in Trincomalee have been languishing till now.
Two, Sri Lanka’s request for a $1 billion swap has not yet materialised.

Three, India has also delayed a decision on a request for a debt moratorium waiver to help Sri Lanka tide over its economic problems during the pandemic.

Four, recently, Sri Lanka cancelled an MoU signed with India and Japan for the East Coast Terminal project. India protested the cancellation though it later agreed to the West Coast Terminal being developed by the Adani group.

Source: This post is based on the article “India finalises cooperation plan to revive Covid-hit Sri Lanka economy” & “Four-pronged plan on Sri Lanka crisis” published in Indian Express and The Hindu on 4^th Dec 2021, respectively.