Colombo: Sri Lanka’s Finance Ministry on Tuesday said the International Monetary Fund will consider providing prompt financial assistance to debt-ridden Sri Lanka after India’s representation.
A delegation led by Sri Lanka’s Finance Minister Ali Sabri began formal talks with the IMF in Washington on Monday, for a program the government hopes will help top up its stockpile and provide essential supplies for fuel, food and medicines. The bridge will attract financing to pay for the imports.
Sabri’s aide Shamir Zawahir said on Twitter that Sri Lanka sought loans under the accelerated financial instrument (RFI) window, meant for countries that urgently need balance of payments. But the global lender was initially unwilling to accept the request, he said.
“The IMF subsequently informed Minister Sabri that India had also made representations to the RFI on behalf of Sri Lanka,” Sri Lanka’s Finance Ministry said in a statement.
“It was informed that the IMF would consider a special request made notwithstanding the outside of the standard circumstances for the issuance of an RFI.”
Sri Lanka’s sovereign dollar-denominated bonds came under pressure again on Tuesday, with the dollar falling 1.4 cents in long-term issues, just over 40 cents from deep crisis levels, data from Tradeweb showed. But to do business.
The country’s devastating financial crisis has come as the impact of COVID-19, which has depleted foreign reserves due to mismanaged government finances and rising fuel prices. Fuel, electricity, food and medicines have been running out for weeks.
Street protests have erupted in the island nation of 22 million people against President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa.
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Sabri told Reuters earlier this month that Sri Lanka is seeking $3 billion in the coming months from multiple sources, including the IMF, the World Bank and India.
Both India and China have already given billions of dollars in financial assistance to Sri Lanka. Sabri met his Indian counterpart Nirmala Sitharaman https://twitter.com/finminindia/status/1516125985044779011?s=24&t=OhOONxIQc0DoHQoNssRmeg during the IMF deliberations, and the two sides said they are looking to deepen their cooperation Agree.
“India will fully support Sri Lanka’s discussions with the IMF, especially on the specific request made to expedite the expanded fund facility,” Sabri’s office said, citing its meeting with Sitharaman.
Sources have told Reuters that India will continue to help its neighbor as it tries to regain the influence it has lost from China in recent years. Beijing is one of Sri Lanka’s biggest lenders and has also built ports and roads there.
Last week, Sri Lanka’s central bank said it was deferring the repayment of some of its foreign debt, pending a restructuring.
In the commercial capital Colombo, protests demanding Rajapaksa’s removal have been going on for more than a week.
In parliament on Tuesday, the prime minister reiterated a call for a unity government that was rejected by the opposition.
The Rajapaksa brothers have also offered to reduce the executive powers of the President by amending the constitution to suppress protests and demands for resignation.
Former President Mahinda Rajapaksa said, “With the President’s support we will move towards comprehensive constitutional reforms.” “We request support from the public, the opposition and all other stakeholders.” (Additional reporting by Aakriti Sharma and Anirudh Saligram in Bengaluru, Karin Strohekar in London; Writing by Udita Jaisinghe and Krishna N. Das; Editing by Christopher Cushing and Raju Gopalakrishnan)
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