Battling huge economic crisis, Sri Lanka raises need for bridge financing with India

Updated on May 27, 2022 08:24 PM IST
India has provided economic assistance worth almost $3 billion to Sri Lanka since the beginning of the year, including lines of credit for purchasing food and fuel, a currency swap and deferring the repayment of loans.
Finance minister Nirmala Sitharaman and Sri Lankan high commissioner Milinda Moragoda at a meeting in New Delhi on Friday. (SRI LANKA HIGH COMMISSION.)
Finance minister Nirmala Sitharaman and Sri Lankan high commissioner Milinda Moragoda at a meeting in New Delhi on Friday. (SRI LANKA HIGH COMMISSION.)

New Delhi: Finance minister Nirmala Sitharaman and Sri Lankan high commissioner Milinda Moragoda on Friday discussed the possibility of increasing the assistance provided by New Delhi to allow the island nation to cope with a severe economic crisis.

Moragoda informed Sitharaman during a meeting that Sri Lanka will require bridging finance until an economic adjustment programme with the International Monetary Fund (IMF) can be negotiated and finalised.

“In this context, the minister and the high commissioner explored the possibility of increasing and restructuring the assistance provided by India in the form of credits for essential commodities and fuel as well as balance of payment support,” said a statement from the Sri Lankan high commission.

The two sides also agreed that the established official-level mechanism for conducting the economic dialogue between India and Sri Lanka should continue.

India has provided economic assistance worth almost $3 billion to Sri Lanka since the beginning of the year, including lines of credit for purchasing food and fuel, a currency swap and deferring the repayment of loans.

During the meeting, Sitharaman and Moragoda assessed the ongoing economic cooperation and discussed the way forward. This was a follow-up to their meeting in mid-April.

Moragoda thanked Sitharaman for the continuation of assistance that India is extending to Sri Lanka in the form of credits for essential commodities and fuel, and for balance of payment support.

He appreciated her action of taking up Sri Lanka’s case on the sidelines of the IMF spring meetings in Washington in April, especially with the IMF, other multilateral institutions and bilateral development partners.

Moragoda also briefed Sitharaman on the latest developments in Sri Lanka.

Sri Lanka has turned to both India and China for bridging finance to tide over immediate difficulties till a bailout is negotiated with the IMF. According to a statement from Japan’s foreign ministry, the Indian and Japanese prime ministers discussed the situation in Sri Lanka during their meeting on the margins of the Quad Summit in Tokyo on May 24 and agreed to work together over the economic crisis.

India’s chief economic advisor, Anantha Nageswaran, who leads the Indian side at the official-level discussions, and senior officials of the Sri Lankan High Commission, also participated in Friday’s meeting.

SHARE THIS ARTICLE ON
Close Story
SHARE
Story Saved
×
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Friday, August 12, 2022
Start 15 Days Free Trial Subscribe Now