Wednesday, November 30, 2022

Sri Lanka plans donor summit with China, India and Japan as economic crisis bites

Amid ongoing talks with the International Monetary Fund (IMF), the Prime Minister said on Wednesday that Sri Lanka will convene a donor conference to seek more foreign aid to China, India and Japan to tide over its worsening economic crisis. .

The island country with a population of 22 million is battling its worst financial crisis in seven decades, unable to import essential commodities including food, fuel and medicines due to severe foreign exchange crunch.

Lack of basic necessities and rising inflation have led to public unrest, prompting Prime Minister Ranil Wickremesinghe’s government to double down on efforts to bring in aid from the likes of the IMF and friendly countries.

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We need the support of India, Japan and China who have been historical allies. We are planning to convene a donor conference with the participation of these countries to find a solution to the Sri Lankan crisis,” Wickramasinghe told Parliament.

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He said, ‘We will also ask for help from America.

Wickremesinghe said a high-level delegation from India will arrive from New Delhi on Thursday to discuss additional support and a team from the US Treasury will visit next week.

India has so far provided about $3 billion in aid, including $400 million in swaps and a total of $1.5 billion in lines of credit.

China, which has traditionally contended with New Delhi for influence over the Indian Ocean island, is considering an appeal to Sri Lanka to swap $1.5 billion worth of yuan-denominated denominations to fund essential imports. terms to be renegotiated.

IMF talks

Wickremesinghe said progress has been made in talks with the IMF team that arrived in Sri Lanka’s commercial capital Colombo this week, with a staff-level agreement with the lender by the end of the month, Wickremesinghe said.

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“We have discussed several points including fiscal policy, debt restructuring and direct cash transfers.

“In parallel with this, we have also started negotiations on a debt restructuring framework, which we expect will be completed in July.”

Sri Lanka, which in April suspended payments of foreign debt worth $12 billion, is seeking around $3 billion from the IMF to keep its public finances on track and access bridge financing.

Wickremesinghe said that once an agreement is reached with the IMF, his government will focus on plans to increase Sri Lanka’s exports and stabilize the economy.

Calling for the opposition’s support for his economic recovery plan, he said, “Reviving a country with a completely collapsed economy is no easy task.”

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