India has also postponed about $1.5 billion in imports to Sri Lanka. (File)
Colombo:
Sri Lanka’s Finance Minister said on Friday that India and the World Bank are considering extending about $2 billion in bridge financing so the country can resume essential imports.
The country of 22 million people is struggling to pay for imports after a sharp drop in foreign exchange reserves led to a depreciating currency and soaring inflation.
Sri Lanka, which has $51 billion in external credit, is working on a broader plan to secure capital to help it weather its worst economic crisis, with prolonged power cuts and Fuel and medicine shortages have sparked nationwide protests.
Ali Sabry said the government has asked some creditors to restructure its debt and has also reached out to China, Japan and the Asian Development Bank among others for help.
India has agreed to double its existing $500 million line of credit for fuel and defer about $1.5 billion in import payments that Sri Lanka needs to make to the Asia Clearing Union. . The High Commission of India said it also extended the expiry date of the $400 million swap in January.
“Negotiations with the World Bank are also very active,” Sabry said, adding: “Over the next four weeks to six months, we expect to have about $500 million from them, a part will be used to transfer cash directly to the poor.”
Sabry is in Washington leading a Sri Lankan delegation to negotiate the program with the International Monetary Fund (IMF). He said negotiations have begun on the Expansion Fund (EFF) but Sri Lanka is in need of $3 billion to $4 billion in funding for the bridge until the program is completed.
“We have a three-pronged strategy. One is to promote an IMF program, the second is to secure the financing for the bridge, and the third is to get Sri Lanka back on the growth trajectory in one year,” he said. or longer”.
Sabry said the government hopes to appoint financial advisers and an international law firm to begin formal debt negotiations with creditors in the next 10 to 15 days.
(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)
