India surpasses China to become Sri Lanka's largest lender; provides $968mn in 4 months

India has surpassed China to become Sri Lanka's top bilateral lender with a total of $968 million in loans in the first four months of 2022. The latest report comes in the backdrop of India repeatedly proving its 'neighbourhood first policy' by assisting several neighbouring nations in various areas such as economy, science and technology and other areas of development. 

Notably, China has been Sri Lanka's top bilateral lender during the previous five years, from 2017 to 2021, disbursing USD 947 million, of which $809 million came through market borrowings from the China Development Bank, according to a Daily Financial Times (Sri Lanka) report quoting publicfinance.lk.

The report further states that the Asian Development Bank (ADB) disbursed grants of $610 million in 2021 to Sri Lanka, making it the largest multilateral lender during the previous five years. According to the Daily FT report, India has disbursed $377 million and ADB has released $360 million, accounting for 76% of the total disbursements in the first four months of 2022.

India provided $4 Billion in assistance to Sri Lanka

Meanwhile, India's Permanent Representative to the UN, Ruchira Kamboj, during a UNGA Annual Joint Debate on the Reports of the Peacebuilding Commission (PBC) and Peacebuilding Fund (PBF), stated that India has donated approximately $4 billion in food and financial support to Sri Lanka.

“In our immediate neighbourhood, we are continuing to help our good friend and neighbour Sri Lanka to ensure food security by providing nearly USD 4 billion in food and financial assistance during the past few months,” Kamboj said.

India has been at the forefront of providing Sri Lanka with economic aid in accordance with their needs and is one of the nations that has given the most aid in a time of need.

Sri Lankan economic crisis

Notably, the island country has been going through a worsening economic crisis since the start of 2022, and the government has defaulted on its international creditors. Numerous Sri Lankans are suffering from food and fuel shortages as a result of the country's severe economic crisis. Since the COVID-19 epidemic began, the economy has been on a free slide.

Sri Lanka is also struggling with a shortage of foreign currency, which has, incidentally, interfered with its ability to import food and fuel and resulted in power outages throughout the nation. It is in this crisis, that the island country was compelled to ask friendly nations for aid due to a scarcity of necessities.