India urges IMF to urgently provide financial aid to Sri Lanka
Sri Lanka sought India’s help last week in garnering international support to secure bridge financing as it enters negotiations with IMF for a bailout programme.
NEW DELHI: India on Tuesday urged the International Monetary Fund (IMF) to urgently provide financial assistance to Sri Lanka to help the island nation cope with its worst economic crisis in decades, according to an official statement.
The matter figured in finance minister Nirmala Sitharaman’s meeting with IMF managing director Kristalina Georgieva on the margins of the IMF-World Bank spring meetings in Washington. Sitharaman raised the matter hours after a meeting with her Sri Lankan counterpart Ali Sabry.
Last week, Sri Lanka sought India’s help in garnering international support to secure bridge financing as it enters negotiations with IMF for a bailout programme. This followed Sri Lanka’s default on its external debt for the first time since its independence in 1948.
Sitharaman “indicated that IMF should support and urgently provide financial assistance to Sri Lanka”, and Georgieva assured her that “the IMF would continue to actively engage with Sri Lanka”, according to an official statement.
Georgieva lauded the help extended by India to its neighbours and other vulnerable economies, especially the assistance provided to Sri Lanka during its difficult economic crisis.
Sabry met Georgieva in Washington on Monday and made a request for a rapid financing instrument (RFI) from IMF. IMF informed Sabry that India too made representations on behalf of Sri Lanka for an RFI, Sri Lanka’s finance ministry said in a statement.
“It had been communicated that IMF will consider the special request made despite it being outside of the standard circumstances for the issuance of an RFI,” the Sri Lankan statement added.
Sabry also met Sitharaman and her delegation in Washington on Monday. Sitharaman assured Sabry about “India’s fullest support to Sri Lanka to move forward” and emphasised New Delhi’s commitment to strengthen the development of the Sri Lankan economy and build stronger bonds between the two sides.
Sitharaman told Sabry that India will “fully support the deliberations of Sri Lanka with the IMF, especially on the special request made for expediting an extended fund facility”, the Sri Lankan statement said.
India has provided Sri Lanka financial aid worth almost $2.5 billion since the beginning of the year, including a $500-million line of credit in February for fuel purchases and another $1-billion line of credit in March for buying food, medicines and other essential items.
It has also provided a currency swap of $400 million under the Saarc facility and deferred the payment of $515 million to the Asian Clearing Union. Sri Lanka has sought another $1 billion in financial assistance to cope with the crisis, which has triggered massive protests against the Rajapaksa government.
Sitharaman and Georgieva also discussed recent geopolitical developments and expressed concern about their impact on the global economy and challenges linked to rising energy prices.