The Government of Sri Lanka's Ministry of Finance has signed an agreement to receive $318m credit from the Government of India for rail development works.

The loan agreement was signed by Ministry of Finance and Mass media secretary Dr R H S Samaratunga and Export- Import Bank of India (EXIM) managing director David Rasquinha, with officials from both governments also present.

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Indian Prime Minister Narendr Modi initially declared the fresh line of credit (LoC) during his official visit to Sri Lanka in March 2015.

The Government of India has already provided four LoC to develop the railway sector in Sri Lanka through its EXIM bank with a total value of almost $966m, which have been used to enhance the Southern and Northern railway lines, as well as to procure rolling stocks for Sri Lanka Railways.

"The new credit line will used to implement various developments under the supervision of Ministry of Transport and Civil Aviation of Sri Lanka."

The new credit line will used to implement various developments under the supervision of Ministry of Transport and Civil Aviation of Sri Lanka, which has prioritised the improvement of passenger transportation facilities in order to attract more passengers to use rail services.

Sri Lanka Railways will also look to reduce railway congestions by improving rail tracks and signalling systems to help facilitate more effective passenger and freight transportation.

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Indian foreign direct investment in Sri Lanka has expanded exponentially in the last few years, which has contributed to the development of economic infrastructural facilities, education, and healthcare services across the country.

Image: Officials of Sri Lanka and India at the signing of a credit agreement. Photo: courtesy of Ministry of Finance – The Treasury of Sri Lanka.