Sri Lanka Seeks Fresh Currency Swap Facility, Deferment of Debt Payments from India

“An additional request for a bilateral currency swap arrangement worth around $1 billion by the Sri Lankan side remains under discussion,” said the Indian foreign ministry in a statement.

Modi told his Sri Lankan counterpart that under the country’s “Neighbourhood First” policy, India will continue to “give special priority to relations between the two countries”, said the officials.

Sri Lanka, located off the southern tip of India, has become an arena of competing influence between India and China, which has built ports, power stations and highways as part of President Xi Jinping’s signature “Belt and Road Initiative”, designed to boost trade and transport links across Asia.

But the terms of some of these projects have drawn domestic criticism in Sri Lanka and opened the way for countries such as India, the United States and Japan to rebuild ties in the Indian Ocean country that lies near key shipping lanes.