India rushes 40,000 tonnes of diesel to crisis-hit Sri Lanka

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India has rushed 40,000 tonnes of diesel under a $1 billion credit line given to Sri Lanka. The ship carrying the fuel has reached the island nation and the fuel is expected to be distributed across Sri Lanka this evening.</p>
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Sri Lanka is in the grip of its worst economic crisis since independence.</p>
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The transport sector in the country has ground to a halt and there are extensive power outages as electricity generation has been hit. </p>
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The Sri Lankan economy is on the brink of bankruptcy as it is running out of foreign exchange reserves amid an acute shortage of goods that has led to a surge in inflation.</p>
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Sri Lanka's President Gotabaya Rajapaksa declared a state of emergency on Friday, giving sweeping powers to security forces a day after hundreds tried to storm his house in anger over the unprecedented economic crisis.</p>
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Sri Lanka's predicament has been compounded by the COVID-19 pandemic, which torpedoed tourism and remittances. Many economists also say the crisis has been exacerbated by government mismanagement and years of accumulated borrowing.</p>
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Cash strapped Sri Lanka, with a debt burden of $6.9 billion this year, had sought another credit line of $1.5 billion from India to meet its import requirements. India has already provided $1.5 billion to Sri Lanka.</p>
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In February, New Delhi provided $500 million to Colombo that helped the island nation in oil purchases. A $1 billion credit line was signed during Sri Lankan finance minister Basil Rajapaksa’s visit to New Delhi earlier this month.</p>
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Meanwhile, the International Monetary Fund said that Sri Lanka was facing solvency issues because of risks stemming from unsustainable debt levels that jeopardize the nation’s economy, Bloomberg in a report said.</p>
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While initially Sri Lanka was hesitant in seeking assistance from the IMF, Colombo is now expected to initiate negotiations with the multilateral agency for a possible bailout package.</p>
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