Foreign financing declines in 1Q 2023 after debt default
Sri Lanka is traversing an unprecedented economic crisis, and according to the Finance Ministry’s latest fiscal situation report, the government‘s foreign fund mobilisation has declined in 1Q this year due to the debt default policy adopted in April 2022.
As such, disbursements and new financing commitments received from conventional bilateral creditors have come down significantly in the first quarter of 2023.
Multilateral creditors continued their operations and some of their projects were repurposed to cater to the budget financing requirements of the government, the report indicated.
Under the Extended Fund Facility (EFF) 2023-2026 of the International Monetary Fund (IMF), Sri Lanka received the first tranche of US$ 333 million to meet budget financing needs.
To strengthen the policy initiatives suggested by EFF, and to support the social safety net to improve vulnerable groups, the government expects to receive a considerable amount of foreign financing from multilateral lenders later this year and beyond, a senior Ministry official said.
Furthermore the Emergency Credit Lines received from the Government of India helped substantially ease the foreign currency needs for the importation of essential goods.
The government has also received $114.2 million from the World Bank and $58 million from the ADB. Foreign financing from the donor countries also came in with the Netherlands loan of $ 3.9 million and German grant of $1.3 million.
Total foreign financing disbursements during the period from January 1 to April 30, 2023, amounted to $670.3 million.
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