Sri Lanka’s economic crisis is taking turns in ways that are pulling down the Sri Lanka economy way more than the authorities might have anticipated. Imports ban on over 360 items by the Sri Lankan government was indeed a significant step taken to safeguard the financial interests of exporters and investors.
However, things are turning out to be critical for Sri Lanka as it is grappling with the ongoing economic crisis and taking credit lines from other countries. Instead of importing short-falling commodities such as fuel and food, Sri Lanka is turning towards the option of credit lining.
Neighbours Help Amid Sri Lanka Economic Crisis
Amidst the worsening economic state in Sri Lanka, a few countries are lending hands to Sri Lanka, such as China and India. While China has given budget support loans to Sri Lanka previously and continues to do so, India is helping with the outbound shipments and credit lines.
Before proceeding further, the shown below trade data features the values of imports Sri Lanka has made from India in the past 5 years, ranging from 2017 to 2022 (till the month of February).
India’s exports to Sri Lanka were the higher in 2019 with an export value of $4 billion, falling drastically down in 2020 (the year of the pandemic) showing a value of $3.4 billion. Surprisingly, Sri Lanka imports reached a skyrocket high in 2021 again with a value of $4.19 billion. So far, for 2022, as per trade data availability till February, the imports amounted to $87 million.
India Exports To Sri Lanka 2022
As per recent news reports, the neighbour country, India is sending ‘prompt’ shipments of Indian rice to Sri Lanka amid Sri Lanka’s economic crisis. India is lending a helping hand to Sri Lanka in grappling with the shortage of fuel and food. Previously, India sent an ‘urgent’ consignment of diesel under a $500 million credit line to Sri Lanka in addition to the fuel imports.
Sources reveal that since Colombo secured a credit facility from New Delhi, India, the trading partner of Sri Lanka is trading 40,000 tonnes of rice as the first major food aid to grapple with the situation of Sri Lanka’s economic crisis. Represented below are the exports of rice from India to Sri Lanka from the first quarter of 2021 to the first quarter of 2022 (till February).
Sri Lanka Growing Imports
From the beginning of the COVID-19 pandemic to the post-pandemic, the trade trend of Sri Lanka imports from India saw a substantial increase. As shown in the data below highlighting Sri Lanka imports from India on a quarterly basis, the total imports of Sri Lanka from India amounted to $3.4 billion in 2020. The imports in 2021 saw a rise from the very first quarter of the year and grew with minor fluctuations amounting to $4.1 billion at the end of the year.
India is proving to be a big asset for Sri Lanka right now to grapple with the ongoing economic crisis in Sri Lanka. Other than the ‘urgent’ consignment and shipments, India, the closest neighbouring country to Sri Lanka, has also extended a $400 million currency swap.
Indian judiciary and administration are also working on constructing a secured gateway to receive the payments made by Sri Lankan importers. A dedicated payment gateway will provide a quick and secure mechanism for both countries to trade efficiently with each other as Sri Lanka restrain the commodities shortage that is coming down the road as days pass by.