Sri Lanka urgently seeks $6bn to keep economy afloat

Colombo, Sri Lanka:   Cash-strapped Sri Lanka yesterday asked the International Monetary Fund to arrange a creditor meeting for $6 billion in loans to help keep the country afloat during its unprecedented economic crisis.

Months of daily blackouts, long queues for petrol and record inflation have made daily life a misery in the country.

The government has already defaulted on its $51 billion foreign debt, and a critical shortage of foreign currency has left traders unable to import adequate supplies of food, fuel and other essential goods.

Prime Minister Ranil Wickremesinghe said the country needed $5 billion for its daily needs in the next six months, along with another billion to stabilise Sri Lanka’s rapidly depreciating rupee.

‘Help to unite lenders’

“We call on the International Monetary Fund to hold a conference to help unite our lending partners,” the premier told parliament.

He said a meeting under IMF auspices with China, Japan and India — Sri Lanka’s three biggest bilateral lenders — would be a “great strength” in helping source more loans.

Sri Lanka is already in talks with the IMF for a bailout and has appointed international experts to help restructure its debt, about half of which is in international sovereign bonds.

Wickremesinghe again warned the country was heading for serious food shortages and said the United Nations had agreed to issue an urgent appeal on Thursday to raise humanitarian funds.

A disastrous ban on agricultural chemical imports, introduced by President Gotabaya Rajapaksa last year, dramatically curtailed crop yields and led to protests by farmers.

The policy was reversed months later, but Sri Lanka is now out of foreign currency to import fertiliser, pesticides and other much-needed farming chemicals.

In his speech to Parliament, Wickremesinghe said the UN plans to provide $48 million in assistance over a four-month period. He said that for the next three weeks it will be tough to obtain some essentials and urged people to be united and patient, to use the scarce supplies as carefully as possible and to avoid non-essential travel.

The island nation is due to repay $7 billion this year of the $25 billion in foreign loans it is scheduled to pay by 2026. Sri Lanka’s total foreign debt is $51 billion.

Expatriate remittances

“The task of rebuilding our declining agriculture must begin immediately. We are losing the international market for our export crops. Action must be taken to prevent this. Chemical fertilisers are needed to boost local agriculture,” he said.

Sri Lanka’s Foreign Employment Minister Manusha Nanayakkara said the government plans to send part of its bloated state workforce on overseas employment to earn much-needed foreign currency. He said Sri Lanka typically received $700 million a month in remittances from expatriate workers, but the figure dropped to $230 million in March.