Sri Lanka’s finance ministry said on Tuesday that the International Monetary Fund (IMF) would consider providing immediate financial assistance to debt-ridden Sri Lanka after India’s representation
A delegation led by Sri Lankan Finance Minister Ali Sabri on Monday began formal talks with the IMF in Washington for a program that the government hopes will help boost its reserves and fuel. Bridge financing will be encouraged to pay for the necessary food and medicine imports.
Shamir Zawahiri, an adviser to Sabri, said on Twitter that Sri Lanka had applied for a loan through the Fast Financial Instrument (RFI) window, aimed at countries in need of immediate balance of payments assistance. However, he said the global lender was reluctant to comply with the earlier request.
The Sri Lankan Finance Ministry said that “the IMF later informed Minister Sabri that India had also submitted submissions for RFI on behalf of Sri Lanka.”
“It was indicated that the IMF would consider the unique request submitted, even though it is out of the ordinary to issue an RFI.”
Sri Lanka’s sovereign dollar-denominated bonds fell further on Tuesday, with the long-dated note falling 1.4 cents to the dollar, just 40 cents, according to TradeWeb data. To trade at a very stressful level.
The country’s devastating financial crisis was triggered by the effects of COVID-19, which exacerbated mismanagement of government finances and depleted foreign reserves for weeks; fuel, electricity, food, and medicine have been running low.
Protests have erupted in the island nation of 22 million people against President Gotabaya Raja Pakse and his brother Prime Minister Mahinda Rajapaksa.
Sabri told Reuters earlier this month that Sri Lanka was seeking 3 3 billion from various sources including the Internation Monetary Funds, the World Bank, and India, to avert a crisis in the coming months.
Both India and China have previously provided billions of dollars in financial assistance to Sri Lanka. Sabri met his Indian counterpart Nirmala Sita Raman on the sidelines of the IMF meeting, and the two sides decided to maintain their cooperation.
“India will fully support Sri Lanka’s negotiations with the IMF, especially a special request to expedite an extended financial facility,” Sabri’s office said, citing its meeting with Sita Raman.
According to Reuters, India will continue to help its neighbor as it seeks to regain lost influence from China in recent years. Beijing is a significant lender to Sri Lanka and has built ports and roads there.
Sri Lanka’s central bank told last week it would delay repayment of its foreign loans to restructure them.
Protests have been going on for more than a week in Colombo’s commercial center, demanding the release of King Paksas.
The prime minister on Tuesday ratified his appeal for a united government in parliament, which was rejected by the opposition.
To quell protests and demands for his resignation, the Raja Pakse brothers have also proposed changes to the constitution to limit the president’s executive powers.
“With the support of the President, we will move forward with a significant constitutional amendment,” said Mahinda Rajapaksa, a former president himself. “We want the support of the people, the opposition, and all other stakeholders.”
The Post 