COLOMBO: Cash-strapped Sri Lanka has secured a billion-dollar credit line from India to buy urgently needed food and medicine, officials said on Friday, as the IMF confirmed it would discuss a possible bailout.

The South Asian nation is suffering its worst economic crisis since independence in 1948, with crippling shortages of essentials and fears it will default on its foreign debt or ask bondholders to take a “haircut” on repayments.

India and Sri Lanka formally entered into the credit agreement on Thursday during Finance Minister Basil Rajapaksa’s visit to New Delhi, Treasury Secretary Sajith Attygalle told reporters in Colombo.

“India stands with Sri Lanka,” Indian Foreign Minister S. Jaishankar said on Twitter. “US$1 billion credit line signed for supply of essential commodities.” The latest loan was on top of another $500-million Indian credit line to help its island neighbour buy oil.

Meanwhile, the International Monetary Fund on Friday confirmed it was considering President Gotabaya Rajapaksa’s surprise Wednesday request to discuss a bailout.

Published in Dawn, March 19th, 2022