Sri Lanka seems to be relying more on India until IMF funding is agreed

Sri Lanka is counting on more aid from India until it secures an International Monetary Fund program that it hopes will unlock aid from other lenders to help deal with the worst financial crisis in its independent history, according to Bloomberg.

The country of South Asia is plagued by shortages of basic necessities, power outages and rampant inflation, which has sparked calls for the ouster of President Gotabaya Rajapaksa. Prime Minister Ranil Wickremesinghe, who also took over as finance minister this week, said on May 26 that he was seeking to speed up talks with the IMF, as the country would need about $ 4 billion this year from multilateral lenders and creditors, including of China and Japan.

Sri Lankan High Commissioner to India Milinda Moragoda met with Finance Minister Nirmala Sitharaman in New Delhi on Friday and reiterated that the island nation will need bridge funding until the IMF program is finalized.

“In this context, the Minister and the High Commissioner explored the possibility of increasing and restructuring India’s assistance in the form of credit for basic goods and fuel, as well as supporting balance of payments,” the UNHCR said in a statement on its website. Facebook.

Sri Lankan central bank governor Nandalal Weerasinghe told a parliamentary committee meeting this week that talks with India were also under way to facilitate an exchange of about $ 1 billion by the Central Bank of India.

Weerasinghe said the next three months would be the “biggest challenge” as the nation faces about $ 500 million a month in foreign exchange shortages.

While Sri Lanka expects about $ 800 million to be channeled through current World Bank and Asian Development Bank emergency relief programs over the next six months, the nation is still heavily dependent on Indian credit for key imports.