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Sri Lanka to borrow $200m from Pakistan

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ISLAMABAD: Pakistan has decided to give Colombo a $200 million loan for the purchase of rice and cement, Sri Lankan media reported.

The decision was made during a recent visit of the Sri Lankan trade minister to Islamabad. However, the terms and duration of the loan were being finalized by the authorities from both the countries, it added.

Sri Lankan Secretary to the Treasury Sajith Attygalle revealed that the two countries have agreed on $200 million dollars in principle while the details of the credit line are yet to be worked out.

Under this credit line, cement, basmati rice, and medicines manufactured in Pakistan are to be imported through the State Trading (General) Corporation.  

Emphasis would be paid for the importation of cement as Sri Lanka saw a cement shortage in the market recently, which had led to skyrocketing prices.

Attygalle noted that the tenure of the credit line is yet to be finalized and the Treasury along with the Trade Ministry and the High Commission are working on drafting the agreement, which is to be cleared by the Attorney General’s Office.

Meanwhile, the government is expecting to secure US $1 billion credit line requested from India next week.

The US $1 billion Indian credit facility is to be financed to import essential items such as food and medicines from India.

India’s External Affairs Minister Dr S Jaishankar and Finance Minister Basil Rajapaksa during a virtual meeting held last month reviewed the progress of the credit line.

Sri Lanka already has drawn down from a US $200 million currency swap it entered into with Bangladesh Bank, for which the country sought a 3-month extension of the validity of the loan in December 2021.

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