Sri Lanka looks to rely on India until IMF finalises funding
Weerasinghe said the next three months would be the ‘biggest challenge’ for the country
Colombo: Sri Lanka is counting on more help from India until it secures an International Monetary Fund program that’s hoped would unlock aid from other lenders to help face the worst economic crisis of its independent history.
The South Asian nation has been plagued by shortages of necessities, power cuts, and rampant inflation. Prime Minister Ranil Wickremesinghe, who this week also took on the role of finance minister, said on May 26 that he’s looking to fast-track talks with the IMF as the nation will need about $4 billion this year from the multilateral lender and creditors including China and Japan.
Sri Lanka’s High Commissioner to India, Milinda Moragoda, met Finance Minister Nirmala Sitharaman in New Delhi on Friday and reiterated that the island nation would require bridging finance until the IMF program is finalized.
“In this context, the minister and the high commissioner explored the possibility of increasing and restructuring the assistance provided by India in the form of credits for essential commodities and fuel, as well as balance-of-payment support,” the high commission said on its Facebook page.
Sri Lanka’s central bank governor, Nandalal Weerasinghe, told a committee meeting in parliament this week that discussions with India were also ongoing for a swap facility of about $1 billion from the Reserve Bank of India.
Weerasinghe said the next three months would be the “biggest challenge” as the nation faced foreign-exchange shortages of about $500 million monthly.
While Sri Lanka expects about $800 million to be channeled from ongoing World Bank and Asian Development Bank projects toward emergency assistance over the coming six months, the nation has so far largely been dependent on Indian credit for essential imports.