Colombo reaches Delhi and Beijing for $3 billion in ‘Bridge Finance’
Colombo reaches Delhi and Beijing for $3 billion in ‘Bridge Finance’
Ahead of the World Bank (WB) and International Monetary Fund (IMF) spring meeting in Washington next week, Sri Lanka is seeking Assisted India to raise at least $3 billion in “reducing funding” from the international community. Sri Lanka’s High Commissioner to India Milinda Moragoda in a meeting with Finance Minister Nirmala Sitharaman on Wednesday thanked India for its provision Loan forgiveness for the first quarter, along with a $2.4 billion line of credit for food, fuel and drugs.
“High Commissioner Moragoda and Minister Sitharaman discussed how India can assist Sri Lanka in securing international support for the Bridging Finance and Economic Adjustment Program through bilateral and multilateral partners,” the Sri Lankan High Commission said. Possibility of augmenting and restructuring some of the assistance already provided by India in the form of loans for essential commodities and fuel as well as balance of payments. The statement said Ms Sitharaman had “expressed concern at the human cost of the economic crisis and said that India will stand by Sri Lanka in addressing its challenges.”
Mr Moragoda said that India is the first country to provide aid to the island nation in these “challenging times”. In the last two weeks, Protest against Rajapaksa government are spread across the country, as inflation levels have risen and currency reserves have fallen.
India has already shipped several shipments of fuel and wheat provided for two lines of credit extended by New Delhi in January, totaling up to $1.5 billion. The Reserve Bank also approved a currency swap arrangement of $400 million and the government agreed to a long-pending request to defer Sri Lanka’s loan repayments for the first quarter. According to an official, Sri Lanka has requested another period of moratorium, which New Delhi is considering, but has not yet indicated a decision.
Mr. Moragoda briefs Ms. Sitaraman about the Sri Lankan decision $51 billion foreign debt announced on Tuesday, while it works with the IMF next week on its economic situation. Ms Sitharaman and Sri Lanka’s Finance Minister Ali Sabri will both visit Washington and are expected to hold a meeting during the spring meetings.
Mr Sabri told Reuters last week that Sri Lanka is seeking at least $3 billion in bridging finance for the next few months, at which time the IMF and WB are expected to restructure debt and a new package of support for the island. Let’s discuss the offer. While India is considering a request for further financial aid and a potential $500 million line of credit for fuel, Sri Lanka’s ambassador to China has said that Sri Lanka also wants to borrow about $1 billion from Beijing, so that China has its own the loan can be repaid. $1.5 billion in line of credit to purchase goods, including essential clothing, for companies, and the clothing export industry.
Mr. Moragoda also looked at the latest discussions on economic cooperation being overseen by teams from both sides, including the Sri Lankan Presidential Advisory Group on Multilateral Engagement and Debt Stability, with the Governor of the Central Bank and the Secretary of the Treasury, Indian Head of State. Economic Advisor V. Ananth Nageswaran and Secretary (Economic Affairs) Ajay Seth.