By Sri Lanka first asked for fertilizer on credit from India and the Ministry of Finance has signed an agreement with the EXIM Bank of India for a 55 million US dollar credit line to procure 65,000 tonnes of urea from India.
The deal has happened while The Yala season is all most ruined and around 80% of farmers have given up their paddy cultivation The 65,000 tones may not be sufficient to service the coming Maha season. A shortage of food is inevitable and extending the Indian credit line may be the only answer.
Indian Pressure
India has tried to capitalize s business opportunities but so far it has not come up with serious political demands such as enacting the 13th constructional amendment.
Political analysts point out that the Indian credit line is something that could be stretched indefinitely and Sri Lanka needs to have its other borrowing opportunities expedited.
Sri Lanka will borrow $1 billion from China to pay off Chinese banks and Chinese credit will also not flow in freely if a plan for repayment is not presented.
Meanwhile, the IMF and World Bank have both hinted that they need see plans for restructuring and comprehensive proposals.
