- Friday, April 26, 2024
By: Shubham Ghosh
THE government of Sri Lanka has said that there is a possibility of it getting further aid worth $1.5 billion (£1.1 billion) from India, weeks after New Delhi announced a billion-dollar assistance package and a balance of payment support to the island-nation which is in the middle of a severe financial crisis.
GL Peiris, the country’s foreign minister, told reporters in Sri Lanka’s central town of Kandy on Sunday (23) that more assistance from India was forthcoming.
“(Finance minister) Basil Rajapaksa, as a result of his talks held in (New) Delhi with madam (India’s finance minister) Nirmala Sitharaman and foreign minister Dr S Jaishankar, was able to obtain a relief package.
Similarly, there is a possibility of us obtaining a further 1.5 billion dollars,” Peiris said.
The Sri Lankan minister also said that the option of approaching the International Monetary Fund was still on the table.
“The doors are still open, we are a member of that organisation (IMF),” Peiris said, adding that the government, however, would be wary of tough conditions being imposed.
Peiris claimed that despite the foreign exchange crisis, Sri Lanka has not hit the rock bottom yet.
The government is rejecting the option of going for an economic bailout package from the IMF. The country’s cabinet is also divided on the issue of approaching the US-based global financial institution.
Earlier this month, India announced a $400 million (£297 million) currency-swap facility to improve Sri Lanka’s gross reserves and deferred the Asian Currency Union settlement of $515 million (£382 million) which local analysts said stopped the reserves’ bleeding.
New Delhi also announced a billion-dollar assistance package in addition to other balance of payment support for the maritime neighbour.
The billion-dollar loan credit facility is to be used to avert a food crisis while allowing for the import of items and medicines. Additionally, there will be $500 million (£371 million) for importing fuel from India.
Sri Lanka is currently facing a severe foreign exchange crisis with falling reserves. It is grappling with a shortage of almost all essentials due to the lack of dollars to pay for the imports.
Additionally, power cuts are imposed at peak hours as the state power entity is unable to obtain fuel to run turbines.
The state fuel entity has also stopped oil supplies as the electricity board has large unpaid bills. The only refinery was recently shut as it was unable to pay dollars for crude import.
The Lankan government is also in talks with China to overcome the current financial crisis.
During Chinese foreign minister Wang Yi’s visit to Colombo earlier this month, Lankan president Gotabaya Rajapaksa requested Beijing’s assistance in mitigating his country’s worsening forex crisis and spiralling external debt, saying it will help Colombo to the best of its capacity.
(With PTI inputs)
