Sri Lanka seeks $850m loan from India, Japan, Singapore
Sri Lanka is seeking funds from India, Japan, Singapore or some other donor agency totalling US$850 million as bridging finance until the proposed IMF facility is approved in the New Year, Finance Ministry sources disclosed.
Talks are underway with these parties to get funds for a short period of six months.
It has already obtained foreign financing of $1.87 billion by entering into eight agreements with foreign development partners and lending agencies in the first nine months of 2022, Ministry data shows.
The government will have to manage imports with available foreign exchange inflows instead of bridging finance if it is not forthcoming, State Finance Minister Shehan Semasinghe said.
Negotiations are now underway with donor countries and international financial agencies to reach agreement on foreign fund mobilisation for 2023 considering it as an emergency matter, he revealed.
Japan and India have both responded well for foreign exchange mobilisation and debt restructuring while Japan is likely to agree on bridge financing and all of these issues have been conveyed to the President, Mr. Semasinghe confirmed. The World Bank and ADB have already informed its inability on lending to Sri Lanka until debt is made sustainable and the macro-fiscal stability is restored but the two agencies are considering alternate ways to assist Sri Lanka, he disclosed.
The World Bank this week approved Sri Lanka’s request to access concessional financing from the International Development Association (IDA).
This type of financing, will enable Sri Lanka to get an IDA loan facility at low interest rates, to implement economic reform programme to stabilise the economy and protect the livelihood of millions of people facing poverty and hunger, he added.
An 8-member Presidential committee is negotiating debt restructuring with China and India and the outcome so far was positive, senior Finance Ministry official divulged.
The members of the committee are Minister of Foreign Affairs Ali Sabry, State Minister of Finance Shehan Semasinghe, Chief of Staff Sagala Ratnayake, Presidential Secretary Saman Ekanayake, Presidential Economic Adviser Dr. R.H.S. Samaratunga, Treasury Secretary Mahinda Siriwardena, Central Bank Governor Dr. Nandalal Weerasinghe and former Governor Indrajit Coomaraswamy.
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