Sri Lanka seeks $3 billion in six months to manage crisis: Finance Minister
- Sri Lanka will need about $3 billion in external aid to restore supplies of essential items
- It plans to restructure international sovereign bonds
- Sri Lanka will look for another $500 million credit line from India for fuel
Sri Lanka will need about $3 billion in external support within the next six months to help restore supplies of essential items, including fuel and medicines and to manage a severe economic crisis, the finance minister said on Saturday.
The island country with a population of 22 million people has been suffering from prolonged power cuts, shortages of medicines, fuel and other items, which brought angry protesters out on the street and put President Gotabaya Rajapaksa under immense pressure.
"It's a Herculean task," Finance Minister Ali Sabry told Reuters in his first interview since taking charge this week, referring to finding $3 billion in bridge financing as the country prepares for negotiations with the International Monetary Fund (IMF) this month.
According to Reuters, Sri Lanka plans to restructure international sovereign bonds and seek a moratorium on payments and is confident of negotiating with bondholders for an upcoming payment of $1 billion in July.
Sabry said that the entire effort is not to go for a hard default. "We understand the consequences of a hard default," he added.
According to JP Morgan analysts, Sri Lanka’s gross debt servicing would be around $7 billion this year, with the current account deficit amounting to $3 billion.
Sri Lanka will look for another $500 million credit line from India for fuel, which would be adequate for around five weeks of demands, Sabry said.
The government is also eyeing some support from the Asian Development Bank, the World Bank, and bilateral partners including China, the United States, Britain and countries in the Middle East, reported Reuters.
Sri Lankan authorities have asked for a $1 billion loan from China to meet the existing repayments to China, and a $1.5 billion credit line to purchase Chinese goods.
Sri Lanka’s new central bank governor, Nandalal Weerasinghe, emphasized the importance of working closely with the International Monetary Fund (IMF). To expedite funding for the country, Sri Lanka will send a strong team to the Spring Meetings of the IMF and the World Bank, he said. The central bank will appoint legal and financial advisors for debt restructuring within two weeks.