India has decided to suspend fresh loan or Line of Credit (LoC) projects in Sri Lanka due to the current state of the economy. Instead, India will now focus on grant-based projects and investments related to connectivity, the Daily Mirror reported. One significant ongoing loan project involves the design, installation, testing, and commissioning of a signaling system for Sri Lankan Railways, covering the stretch from Maho to Anuradhapura, with a credit line of US $14.90 million. However, existing projects will remain unaffected by this decision. Sri Lanka recently completed bilateral debt restructuring with India and other countries, with India being one of its main bilateral creditors.
Additionally, India has converted the development of the Kankesanthurai port into a grant project. Previously, India had announced a loan of over US $60 million for the port, but it has now been converted to a grant.
Meanwhile, Japan has also made a similar decision. Although it will resume 11 stalled projects in Sri Lanka, it will not approve any fresh yen loans until the country’s economic situation improves satisfactorily. The Japanese projects set to resume cover various areas, including wastewater management, airport development, water supply, and infrastructure enhancement
