Despite the guidelines issued for the use of a short term US$1 billion Indian line of credit solely for the procurement of food items and medicines, Sri Lanka is planning to use these funds to import steel from India, reliable official sources said, Sunday Times reported.
A sum of $250 million has already been spent from this loan facility and a part of the balance $750 million is to be used for the steel imports.
Several economists expressed concern at this move when the country is in urgent need of food items, essential commodities, fuel, LP gas and even much needed foreign exchange suffering masses.
India is extending extra lines of credit to Sri Lanka in a bid to keep bilateral trade between the two countries intact and maintain its business interests alive even amidst the country’s worst economic downturn.
It has been revealed that several ruling party business dealers with high political connections were behind the steel deal under the cover of expediting the construction work of mixed development projects even during the difficult period.
Preliminary negotiations were held with State Bank of India to obtain necessary funds from the credit line for the procurement of steel necessary for the construction work of several ongoing mixed development projects, during former Finance Minister Basil Rajapaksa’s tenure in office.
Sri Lanka will be receiving another Indian line of credit amounting to $500 million to Sri Lanka for urgent fuel imports. India has provided financial assistance to the tune of $2.4 billion in the last three months to Sri Lanka, which includes a $400 billion reserve Bank of India (RBI) currency swap, deferral of a $500 million loan and a $1.5-billion credit line for importing essential commodities including fuel, food and medicines.
