Sri Lanka relies on India for more help until IMF funding approval

“IMF staff will continue to monitor the economic and political situation very closely and engage with the authorities to formulate concrete measures under an IMF-supported program, as well as broader stakeholders to support a timely resolution of the crisis," IMF said.

Sri Lanka’s High Commissioner to India, Milinda Moragoda met Union Finance Minister Nirmala Sitharaman on Friday (May 27). Photo: Twitter/Sri Lanka High Commission in India

Sri Lanka’s High Commissioner to India, Milinda Moragoda met Union Finance Minister Nirmala Sitharaman to evaluate the status of ongoing economic cooperation and to discuss the way forward as the island nation grapples with its worst economic crisis.

According to reports, Moragoda, during the meeting with Sitharaman on Friday (May 27), reiterated that Sri Lanka would require bridging finance until the International Monetary Fund (IMF) programme is finalised and approved.

Also read: RBI allows settlement of trade transactions with Sri Lanka in INR

“Following his meeting in mid-April, High Commissioner @MilindaMoragoda again met with the Finance and Corporate Affairs Minister of India @nsitharaman today (27) to evaluate the status of ongoing economic cooperation and to discuss the way forward. #lka (sic),” the official Twitter handle of the Sri Lanka High Commission in India posted with a picture of the meeting.

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“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,” the high commission said on its Facebook page.

Last month, India extended an additional $500 million credit line to Sri Lanka.

On Thursday (May 26), the IMF said it had conducted a virtual mission with the Sri Lankan authorities during May 9-24 on an economic programme that could be supported by an IMF lending arrangement.

Also read: Crisis-hit Sri Lanka lifts state of emergency

In a statement, IMF said, “Since Sri Lanka’s public debt is assessed as unsustainable, approval by the Executive Board of an IMF-supported program for Sri Lanka would require adequate assurances that debt sustainability will be restored.

“IMF staff will continue to monitor the economic and political situation very closely and engage with the authorities to formulate concrete measures under an IMF-supported program, as well as broader stakeholders to support a timely resolution of the crisis. We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies.”

On Thursday, Prime Minister Narendra Modi, during an official visit to Chennai, said India will continue to help Sri Lanka.

“Sri Lanka is going through difficult times. I am sure you all are concerned about it. As a close friend and neighbour of Sri Lanka, India is providing all possible support to the country including financial support, support of fuel, food, medicines and other essential items to the country,” PM Modi said.

“Many Indian organisations and individuals have sent assistance for their brothers and sisters in Sri Lanka including Tamils in the North and East. India has spoken strongly in the international fora for extending economic support to Sri Lanka. India will continue to stand will the people of Sri Lanka and support democracy, stability and economic recovery,” he added.

Also read: India supplies another 40,000 metric tonnes of diesel to crisis-hit Sri Lanka

Sri Lankan Prime Minister Ranil Wickremesinghe, on Friday, spoke to Sitharaman and expressed appreciation for India’s support during “this difficult period”.

“Assistance from India and Japan: I am grateful for the positive response from India and Japan on the proposal made for the Quad members (United States, India, Japan, and Australia) to take the lead in setting up a foreign aid consortium to assist Sri Lanka.

“I had a conversation with India’s Minister of Finance @nsitharaman today. I expressed our country’s appreciation for the support India has extended during this difficult period. I look forward to further strengthening ties between our nations,” Wickremesinghe tweeted.

In recent times, India has sent relief materials including kerosene, diesel, petrol, rice, milk powder, and medicines to Sri Lanka.

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