India to contribute an additional $500 million in fuel aid to Sri Lanka

26 April, 2022 | Riya Girdhar

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Meanwhile, China has stated it will send "immediate humanitarian assistance" to Colombo, following accusations of debt diplomacy over its big loans and investments to the island nation.

Sri Lanka’s foreign minister told reporters on Wednesday that India will contribute an additional $500 million in financial aid to help the country buy fuel, and that Bangladesh is willing to postpone $450 million in swap reimbursements.

Meanwhile, China, whose substantial loans and investments to the island nation have sparked accusations of debt diplomacy, has stated that it will provide “immediate humanitarian assistance” to Colombo, but has stayed silent on the island government’s request for debt rescheduling.

Earlier, India had also provided USD 1 billion credit to Sri Lanka to support the island nation’s ailing economy. Colombo will benefit from a USD 1 billion line of credit to help keep food and fuel prices in check. 

This is the second $500 million in gasoline credit that India has given to a Sri Lankan government grappling with the country’s greatest financial crisis in living memory.

After a shipment of 120,000 tonnes of diesel and 40,000 tonnes of gasoline earlier this month, the first line of credit was exhausted.

India has supplied approximately 400,000 tonnes of petroleum so far.

After fuel stockpiles were depleted, massive protests erupted on Tuesday.

AFP claimed that thousands of irate motorists torched tyres and blocked a major road leading into Colombo, citing police and local officials.

On the sidelines of the IMF-World Bank spring conference in Washington, DC, finance minister Nirmala Sitharaman met with IMF chief Kristalina Georgieva.

Georgieva praised India’s assistance to its neighbours and other economically weak countries, particularly Sri Lanka.