India has agreed to extend a $1bn line of credit to Sri Lanka as the latter is currently navigating one of its worst social and economic crises on the back of food, energy and import shortages coupled with dwindling forex reserves. The India ministry of finance said the credit facility will be extended through the State Bank Of India (SBI). This credit line will be used to procure essential items, food, and medicines. In February, India provided $500mn via a loan facility to Sri Lanka for procuring petroleum products and tackling the energy crisis. Both countries have set up a framework for economic co-operation between them. After a public protest on March 15, Sri Lanka agreed to engage in in discussions with the IMF. Sri Lankan President Gotabaya Rajapaksa said, “Through those discussions, we hope to find a way to pay off our annual loan instalments, sovereign bonds and so on.”

Sri Lanka’s dollar bonds were trading higher, its 7.85% 2029 were up over 1.76 points to 53.06, yielding 20.94%.

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