India keen to see credit line to Sri Lanka and Trincomalee oil tank farm deal progress in tandem

by Sanath Nanayakkare

Delhi may offer financial assistance to help Sri Lanka tide over its foreign reserves crisis and at the same time it is keen to see the government of Sri Lanka moving ahead on finalising plans for developing a massive oil tank farm in Trincomalee jointly with India, according to a news report published in The Indian EXPRESS on Wednesday.

In the midst of the crippling economic crisis that has seen Colombo turn to Delhi for help, the fast-tracking of the ‘long-delayed’ India-Sri Lanka plan for joint development of the Trincomalee oil tank farm is in the works, according to the report.

“Although neither country is saying it in so many words, Delhi may offer financial assistance to help Sri Lanka tide over its foreign reserves crisis in return for finalising this project. An Indian official source has said that both matters should progress in parallel, and progress in one should reinforce the progress in the other towards strengthening economic ties.” the report added.

An Indian official has further said that January 2022 may see important developments on the Trincomalee oil tank farm deal.

The Central Bank of Sri Lanka said on Wednesday that inflows were forthcoming and with the receipt of recent inflows, the official reserves position has reached around US dollars 3.1 billion,

A source knowledgeable on the matter told The Island Financial Review yesterday that the increase in the official reserve position of the country was due to the receipt of the ¥ 10 billion SWAP facility from China. He further said that discussions relating to the $ 1.9 billion financial assistance from India have reached its final stages.

“The expected financial assistance from India will be in the form of a $ 400 million currency SWAP to help Sri Lanka address the existing balance of payment issues; a $ 1 billion line of credit to cover the import of food, medicine, and other essential items from India to Sri Lanka; and a $ 500 million line of credit to cover the import of fuel from India,” he said.