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  • India steps up aid to Lanka as China stays silent

    India steps up aid to Lanka as China stays silent

    A fresh $500 million additional support by India to Colombo is over and above $ 1.5 billion of credit line offered by India earlier.

     “A friend in need is a friend indeed” is the saying as it goes. The dictum is in full play as India has offered Sri Lanka an additional $500 million to help it to import fuel while it is in an advance stage of discussion with the International Monetary Fund (IMF) for a bailout package.

    Sri Lanka, which is grappling with one of the worst-ever foreign exchange crisis and shortage of essential commodities, was extremely disappointed when China declined to come forward in support of the country on flimsy grounds.

    The fresh $500 million additional support by India to Colombo is over and above $ 1.5 billion of credit line offered by India earlier.

    The economic situation in Sri Lanka is dire and it had requested both India and China for support in these difficult times.

    India responded with an additional $500 million for the time being as against Colombo’s request for $ 1 billion, but China cited difficulties in supporting the country.

    The RMB 200 million ($ 31 million) of Chinese humanitarian assistance to Colombo is a diplomatic way of denial rather than genuine support.

    Sri Lanka had asked $ 1 billion loan and $ 1.5 billion buyer’s credit from China and the so called “humanitarian assistance” is of no avail for a country which is facing difficulties in importing even essential commodities.

    Sri Lanka needs at least $4 billion to meet its immediate debt service and import requirements.

    Ali Sabry, the new Finance Minister of Sri Lanka is presently holding talks with international institutions including the IMF, the World Bank, China and Japan.


    He expressed hope that if the efforts are successful and an investment of $ 2 billion comes to Central Bank, it will help stop the depreciation of SLR and stabilise it.

    After last week’s announcement by Colombo about imminent default of $ 35.5 billion in foreign debt by it due to disruptions caused by Covid-19 pandemic and Ukraine war, it started pro-active deliberations with the IMF for a bailout package.

    The IMF management met Sri Lankan delegation led by Finance Minister Ali Sabry and Central Bank of Sri Lanka Governor Nandalal Weerasinghe in Washington DC. Sri Lankan delegation discussed policy actions to address economic challenges.

    (ANI)

    The discussion between Sri Lankan delegation and multilateral agencies revolved around recent economic and financial developments in Sri Lanka, the need for implementing a credible and coherent strategy to restore macro-economic stability and the importance of stronger safety nets to mitigate the adverse impact of the current economic crisis.

    Sri Lanka has to repay about $ 7 billion this year in debt servicing and other obligations. It has sought $ 4 billion of multilateral assistance from the IMF.

    India has also supported Sri Lanka’s efforts in this regard. Many analysts view that had China come forward with a supporting hand, Colombo could have averted default and succeeded in tiding over its economic malaise till it could manage to get a bailout package from the IMF. Instead, China showed an indifference much to the dismay of Colombo.

    Meanwhile, Sri Lankan government is confronting widespread public protests which initially demanded resignation from the Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa and are now demanding to form an interim government to tackle the economic crisis.

    However, Mahinda Rajapaksa while rejecting the demand for an interim government noted that “people need to show patience to face the crisis”.

    However, the public is losing patience amid shortage of food fuel, power, medicine and other essential items. Meanwhile, the country continues to face the problem of fiscal and current account deficits along with foreign exchange crisis. It has been pushed to default on foreign debt servicing.

    Sri Lanka needs support and the countries which feign to be well-wishers of Colombo should ideally come forward. This is a moral obligation.

    India has extended its support and is willing to help in all possible ways. But China, which invested in mega projects in the country and pushed it into debt-trap was now giving pretext of “difficulties” rather than providing support. No self respecting country could ever erase such bitter experiences from its memory.

    Sri Lanka is not just a green pasture for investment and strategic leverage. It is a country of 2 crore human beings, grappling with the most difficult times of their life.

    It needs solidarity in the time of adversity and not kindness or alms like the Chinese “humanitarian assistance”.

    ALSO READ: MHA reveals number of Lankan, Tibetan refugees in India

  • Lankan president ready to form all party govt

    Lankan president ready to form all party govt

    Gotabaya Rajapaksa said that the structure, the tenure and the portfolios of this all-party government have to be agreed upon after discussions…reports Asian Lite News

    Sri Lankan President Gotabaya Rajapaksa on Wednesday said that he in principle is willing to form an all-party government with the political parties represented in Parliament.

    He conveyed this message to the leaders of political parties aligned with the Sri Lankan government.

    Gotabaya Rajapaksa said that the structure, the tenure and the portfolios of this all-party government have to be agreed upon after discussions, Xinhua News Agency reported.

    Rajapaksa said the proposed all-party government is to be established after the resignation of the Prime Minister and the Cabinet.

    Sri Lankan Prime Minister Mahinda Rajapaksa

    He has invited the leaders of political parties of the ruling coalition for a meeting on Friday.

    Sri Lanka has been gripped by an economic crisis with foreign debt estimated at USD 51 billion. The country appears to be on the edge of a “humanitarian crisis”, according to the United Nations Development Programme, as its financial troubles grow, with rising food prices, and the country’s coffers have run dry.

    Several political parties of the ruling coalition and religious leaders have urged the Sri Lankan president to establish an all-party government to find a way out of the economic and political crisis. (ANI)

    ALSO READ: Debt refinancing: Lanka pins hopes on China

  • Is fall of Rajapaksa Family imminent?

    Is fall of Rajapaksa Family imminent?

    The Rajapaksa family exercised almost all the critical roles of governance, indirectly controlling more than 70 per cent of the Sri Lankan budget, writes Dhananjay Tripathi

    The domestic political landscape of South Asia is fascinating. One can find strong political dynasties in most of South Asian democracies. The Bhuttos and Sharifs are well known dynastic icons in Pakistan, the Koiralas have frequently dominated the political landscape in Nepal, Hasina and Zia families have ruled the roost in Bangladesh, while the Gandhi family’s extended innings in India is common knowledge.

    Similarly, the mention of Sri Lankan politics is incomplete without a discussion on the Rajapaksa family. In the last few months, Sri Lanka has occupied headlines in every South Asian country, precisely for its unprecedented economic crisis. This happened when the Rajapaksa family was completely dominating the Sri Lankan government.

    Prior to the recent cabinet reshuffle, more than six family members occupied cabinet posts. A few others were well ensconced in the state ministerial position. The family exercised almost all the critical roles of governance, indirectly controlling more than 70 per cent of the Sri Lankan budget.

    Just take a look at some of the important portfolios taken over by the family after 2019. These included President (Gotabaya Rajapaksa), Prime Minister (Mahinda Rajapaksa), Minister of Finance (Basil Rajapaksa), Minister of irrigation (Chamal Rajapaksa), Minister of Youth and Sports (Namal Rajapaksa), and State Minister of Paddy and Grains, Organic Food, Vegetables, Fruits, Chillies, Onion and Potato, Cultivation Promotion, Seed Production and Advanced Technology Agriculture (Shasheendra Kumara Rajapaksa). This is not new for the Rajapaksa family, which had almost 40 members occupying various government posts when Mahinda Rajapaksa was the President from 2010 to 2015.

    Why So Popular?

    While today one can see street protests against the family in almost every corner of Sri Lanka, it is also true that the Rajapaksas have enjoyed substantial support from the public in the past. Riding on the Sinhala-Buddhist Nationalist sentiment, this family maintained a strict position against the Tamil and Muslim minorities. They also kept siding with China on foreign policy issues. Their party glorifies Mahinda and Gotabaya Rajapaksa for crushing the Tamil separatist movement in 2009.

    Mahinda Rajapaksa had won the 2005 Presidential elections. He later called his brother Gotabaya Rajapaksa-a retired military official who had shifted to the US to Sri Lanka. Gotabaya returned to this island nation and joined his President and brother as the Defence Secretary. After that, the duo inflicted severe injury on Tamil separatists and defeated them convincingly. There are several allegations of human rights violations against the two brothers for their highhandedness and inhuman approach to the civil war. But for the Sinhalese nationalists, these two brothers were like “terminators,” despite accusations that they were running “death squads”.

    The victory of the Sri Lankan State in the Civil War under the political leadership of the Rajapaksa brothers earned them enough accolades to establish their supremacy. In the 2010 Presidential election, Mahinda Rajapaksa secured some 57.88 per cent of the votes and won the race for the President post for the second consecutive term with a comfortable margin. Although Mahinda Rajapaksa lost by a slight margin in 2015 due to several complaints of corruption, in 2019 his brother Gotabaya captured the Presidential position, defeating his nearest rival by a healthy margin of 11 per cent.

    The island nation, recovering from the civil war again witnessed the large-scale terror attack. It was 21st April 2019 when militants belonging to the National Tawahujja Jama’ath (NTJ) carried out what is termed as �Easter bombings’ that had killed more than 260 people, including some 40 foreign nationals. This Easter terror attack again brought the Rajapaksa family to the limelight, already known for winning the Civil War. Thus, all these disturbances implicitly helped the Rajapaksa family in its political careers, as they were seen as tough and strong leaders. As a result, in the last 17 years, the family has remained in power for almost 13 years.

    The Family Background

    The Rajapaksa family is from the land-owning class that belonged to the Giruwapattuwa village. While the family gained prominence in Sri Lankan politics in the last two decades, it was always considered a heavyweight in the Southern district of Hambantota. In electoral politics, the family history goes back to 1936 when D. M Rajapaksa was elected to represent the Hambantota district in the state Council. After that, family members remained in politics and were in high profile political positions. Although, their ascendancy and domination in national politics have been witnessed in the last couple of decades.

    The China Inclination

    Facing their most demanding challenges in the political arena, the Rajapaksa brothers had decided to continue in office with some changes in the cabinet. This family had shown no hesitation in aligning with China. Some big projects like Magampura Mahinda Rajapaksa Port (Hambantota International Port) and Colombo Port City were awarded to Chinese infrastructure companies. Critics have raised valid questions such as the economic rationale and utility capacity of such big projects for a small nation. Nevertheless, Mahinda Rajapaksa remained firm and backed China. One good example is the Mattala Rajapaksa International Airport (MRIA). Due to less traffic, this airport was also tagged as the ‘world’s emptiest airport’. This airport was constructed by taking a Chinese high-interest loan. Due to heavy losses in MRIA, Ranil Wickremesinghe’s government in 2018 entered into a negotiation with India to jointly operate this airport. Albeit, after the election of G. Rajapaksa in 2019, things changed. Gotabaya Rajapaksa was not in favour of India jointly operating MRIA, and he ended negotiations with India.

    Let us not forget that the international community criticised the Rajapaksa family for war atrocities, and they remained sceptical in assisting them. On the other hand, China was soft and even provided “sophisticated weaponry” to the Sri Lankan military during the civil war.

    What Next?

    The Sri Lankan economy has defaulted on debt; the country is negotiating with the IMF for a bailout package and approaching others countries like India for help. It is a new low in the political life of the Rajapaksa family. They always manage to ride on the national sentiment and project themselves as powerful leaders. These are the reasons why even corruption issues against some family members have not deterred them from occupying high power seats. This may undergo a change, and this time even China is not coming unconditionally to rescue the Rajapaksa clan. As of now, with international help, the Rajapaksa family may survive this Tsunami, but in the future, the image reconstruction for the Rajapaksas will remain a herculean task.

    (Dhananjay Tripathi is an Associate Professor in the Department of International Relations at South Asian University, New Delhi. The views expressed are personal) (The content is being carried under an arrangement with indianarrative.com)

    ALSO READ: Lanka PM sees no reason to step down

  • Debt refinancing: Lanka pins hopes on China

    Debt refinancing: Lanka pins hopes on China

    China is Sri Lanka’s biggest creditor having provided the Island nation with USD 3.5 billion of credit…reports Asian Lite News

    After talks with International Monetary Fund (IMF) amid the ongoing economic crisis in the country, Sri Lanka’s Mass Media Minister Nalaka Godahewa on Tuesday said that the country is in talks with China as well for refinancing its debt.

    “Now that IMF (International Monetary Fund) is ready to cooperate with Sri Lanka, other countries are aware that we have support. We were guaranteed the support of the World Bank and other (financial) agencies,” Godahewa said, adding that the negotiations with Beijing are at an early stage, Sputnik reported.

    China is Sri Lanka’s biggest creditor having provided the Island nation with USD 3.5 billion of credit, the report said citing local media.

    Last Tuesday, the Sri Lankan Finance Ministry said the IMF and India pledged assistance to mitigate the economic crisis that has gripped the country.

    An IMF official on Tuesday advised Sri Lanka to tighten its monetary policy, raise taxes and adopt flexible exchange rates to overcome its debt crisis, according to media reports.

    “We’ve had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and a couple of days before,” Xinhua quoted Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, as saying during an online event.

    “The requirement for fund lending will be progress toward debt sustainability. Monetary policy has to be tightened to keep inflation in check. We see a need for flexible exchange rates,” she added.

    However, the IMF official refrained from commenting on the value of any IMF package, or an estimated time needed to come into an agreement with the island nation.

    Sri Lanka is facing one of its worst economic crises resulting in widespread protests against the Rajapaksa family leaders, including President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa.

    The recession is attributed to foreign exchange shortages caused by a fall in tourism during the COVID-19 pandemic, as well as reckless economic policies, which have resulted in the country being unable to buy enough fuel, and people facing an acute scarcity of food and basic necessities, heating fuel, and gas.

    The island nation has been gripped by an economic crisis, considered the worst since the country gained independence in 1948. Due to energy shortages, some parts of Sri Lanka have rolling blackouts. Sri Lanka’s foreign debt is estimated at USD 51 billion.

    Sri Lanka appears to be on the edge of a “humanitarian crisis”, according to the United Nations Development Programme, as its financial troubles grow, with rising food prices, and the country’s coffers have run dry.

    According to World Bank estimates, five lakh people in Sri Lanka have fallen below the poverty line since the onset of the crisis. (ANI)

    ALSO READ: Lanka PM sees no reason to step down

  • Lanka PM sees no reason to step down

    Lanka PM sees no reason to step down

    Amid soaring dollar crisis leading to lack of basic essentials such as fuel, gas, food, medicine and fertiliser, people are on the streets demanding the government to step down…writes SUSITHA FERNANDO

    Despite mounting pressure both within and outside his government, Sri Lankan Prime Minister Mahinda Rajapaksa has reiterated that he would stick to the premiership.

    Addressing a group of Provincial council members of his party, Rajapaksa on Tuesday said, “Don’t be afraid I would not give up.”

    Provincial Council (PC) system was a result of the India-Sri Lanka Peace Accord signed in July 1987 between India’s former Prime Minister Rajiv Gandhi and then Sri Lankan President J. R. Jayewardene to resolve country’s civil war between majority Sinhalese and minority Tamil rebels.

    PC members passed a resolution urging the Sri Lanka Prime Minister not to give up power. As Mahinda Rajapaksa, the elder brother of President Gotabaya Rajapaksa, was strongly resolute not to leave his seat, protestors surrounded his official resident ‘Temple Trees’ blocking the main entrance on Tuesday.

    As the apolitical people’s movement continued to block the Sri Lankan President’s office, Presidential Secretariat chasing him away to a safer whereabouts since April 2, both MPs from opposition and the government have been urging to form an all-party interim government until the constitutional deadlock is over.

    The Sri Lankan Prime Minister demands forming of an interim government only under his premiership and insisted getting back to 19th Amendment to the Constitution acquiring his younger brother, Gotabaya’s super powers which he won with the passing of 20th Amendment.

    However, amid soaring dollar crisis leading to lack of basic essentials such as fuel, gas, food, medicine and fertiliser, people are on the streets demanding the government to step down.

    (ANI)

    On Tuesday the World Bank team in Colombo met President Gotabaya Rajapaksa and agreed to provide $600 million in financial assistance to address the current economic crisis. The World Bank Country Manager, Chiyo Kanda, said $400 million would be released immediately under the first phase.

    Since economic crisis was brewing India has assisted its closest south Asian neighbour with more than $2.5 billion for the first quarter of 2022 and last week promised an additional $500 million in financial assistance to buy fuel. The country’s foreign debt for 2022 exceeds $7 billion but with the remaining $1.6 billion forex reserves, the Central Bank announced a default on all its foreign debts.

    Sri Lankan team lead by the Finance Minister was on talks with the International Monetary Fund (IMF) in Washington and announced on Saturday that its request for more dollars was ‘fruitful’.

    However, Sri Lanka turning to the IMF for a bailout has ‘hurt’ Beijing which had said it was considering a $1 billion loan and a $1.5 billion credit line to purchase goods from China.

    “Sri Lanka going to IMF with a short notice has unavoidably impacted the discussion,” Sri Lanka with more than $50 billion in external debt and a shortage of foreign exchange reserves, and skyrocketing inflation struggles to pay for the essential imports, including food and medicine.

    While medicines have gone out of stocks in both state and private sector hospitals, doctors have declared a situation of medical emergency and pleading with the World Health Organisation, foreign countries and even its own domiciles to send specific medical supplies to the country.

    Responding to Sri Lanka’s medical crisis, nearly 101 types of medicines and surgical equipment donated by India is to reach the island nation through a vessel belonging to Indian Navy.

    ALSO READ: IMF tightens grip over debt-ridden Lanka

  • IMF tightens grip over debt-ridden Lanka

    IMF tightens grip over debt-ridden Lanka

    The island nation has been gripped by an economic crisis, considered the worst since the country gained independence in 1948….reports Asian Lite News

    International Monetary Fund (IMF) official on Tuesday advised Sri Lanka to tighten its monetary policy, raise taxes and adopt flexible exchange rates to overcome its debt crisis, according to a media report.

    “We’ve had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and a couple of days before,” Xinhua quoted Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, as saying during an online event.

    “The requirement for fund lending will be progress toward debt sustainability. Monetary policy has to be tightened to keep inflation in check. We see a need for flexible exchange rates,” she added.

    However, the IMF official refrained from commenting on the value of any IMF package, or an estimated time needed to come into an agreement with the island nation.

    This comes as Sri Lankan Finance Minister Ali Sabry and Governor of the Central Bank Nandalal Weerasinghe recently concluded a visit to the IMF to discuss financial assistance for the country.

    The island nation has been gripped by an economic crisis, considered the worst since the country gained independence in 1948. Due to energy shortages, some parts of Sri Lanka have rolling blackouts. Sri Lanka’s foreign debt is estimated at USD 51 billion.

    Sri Lanka appears to be on the edge of a “humanitarian crisis”, according to the United Nations Development Programme, as its financial troubles grow, with rising food prices, and the country’s coffers have run dry.

    According to World Bank estimates, five lakh people in Sri Lanka have fallen below the poverty line since the onset of the crisis. (ANI)

    ALSO READ: Crisis-hit Lanka seeks foreign investments

  • Crisis-hit Lanka seeks foreign investments

    Crisis-hit Lanka seeks foreign investments

    The Minister said that the government is talking with several countries to get funds as soon as possible….reports Asian Lite News

     Sri Lanka is looking for investors that can bring in more than $2 billion into the central bank, Finance Minister Ali Sabry said.

    Sabry said that the next few months will be difficult for Sri Lankans, reports Xinhua news agency.

    “There is a need to attract investments in U.S. dollars into Sri Lanka’s central bank,” he said.

    The Minister said that the government is talking with several countries to get funds as soon as possible.

    “If that effort is successful and money comes to the central bank, it will help stop the depreciation and stabilise the rupee,” he said.

    Amid the ongoing economic crisis, the Sri Lankan government decided last week to suspend repayment for all debts for an interim period till it has an orderly and consensual debt restructuring programme supported by the International Monetary Fund.

    ALSO READ: Lankan exporters can now pay diesel in US dollars

  • PM Rajapaksa expresses distress over Rambukkana violence

    PM Rajapaksa expresses distress over Rambukkana violence

    Sri Lanka police imposed a curfew in the Rambukkana Police Division until further notice following unrest in the country with the clash between protesters and police in the city….reports Asian Lite News

    Sri Lankan Prime Minister Mahinda Rajapaksa on Wednesday said that he is deeply distressed following the violence that took place in Rambukkana town.

    Taking to Twitter, Rajapaksa urged the protestors to engage in their civic right with equal respect and honour.

    “Deeply distressed following the tragedy in Rambukkana. I have every confidence that a strict, impartial investigation will be carried out by @SL_PoliceMedia who’ve always served #lka with utmost honor. I urge protesters to engage in their civic right with equal respect & honour,” Rajapaksa tweeted.

    Sri Lanka police imposed a curfew in the Rambukkana Police Division until further notice following unrest in the country with the clash between protesters and police in the city.

    “Police curfew has been imposed in the Rambukkana Police Division until further notice,” Police spokesperson said.

    This action comes after one person died and 24 people were injured by the gunshot after the protesters and police clashed in Rambukkana town of Sri Lanka on Tuesday afternoon.

    The protesters were agitating in Rambukkana against the decision of increasing the fuel prices again, Daily Mirror reported.

    According to the publication, in the videos, the protestors were seen carrying the wounded people and rushing them to the hospital.

    A protestor, in a video, also blamed the police for this incident. They have surrounded the Rambukkana Police Station and are hurling stones at the building, as reported by Daily mirror.

    Earlier, Sri Lankan police had shot tear gas at the protesters to disperse them after the 15-hour protest against the fuel price hike, the report added.

    On Monday, the Ceylon Petroleum Corporation (CPP) decided to increase fuel prices. A litre of petrol 92 octane has been increased by Rs 84 while a litre of petrol 95 octane by Rs 90, a litre of Auto Diesel by Rs 113 and a litre of super diesel has been increased by Rs 75.

    Meanwhile, the US ambassador to Sri Lanka, Julie Chung called for restraint and calm after reports of violence emerged from the town.

    “I am deeply saddened by the horrible news coming out of Rambukkana. I condemn any violence – whether against protesters or police – and call for restraint and calm from all sides. A full, transparent investigation is essential and the people’s right to peaceful protest must be upheld,” Ambassador Chung tweeted.

    Sri Lanka is facing its worst economic crisis since independence with food and fuel shortages, soaring prices and power cuts affecting a large number of the people, resulting in massive protests over the government’s handling of the situation.

    The economic situation has led to huge protests with demands for the resignation of Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa. (ANI)

    ALSO READ: IMF lauds steps taken by Lanka to stabilise economy

  • IMF lauds steps taken by Lanka to stabilise economy

    IMF lauds steps taken by Lanka to stabilise economy

    The IMF has assured its fullest support, and a positive response has also been received to expedite the process to strengthen the support extended to Sri Lanka…reports Asian Lite News

    The International Monetary Fund (IMF) has commended the steps already taken by Sri Lanka to stabilise its economy, the Sri Lankan Finance Ministry said in a press release here on Tuesday.

    The ministry said Finance Minister Ali Sabry met IMF Managing Director Kristalina Georgieva on Monday at the IMF headquarters, Xinhua news agency reported.

    The IMF has assured its fullest support, and a positive response has also been received to expedite the process to strengthen the support extended to Sri Lanka, according to the press release.

    Sabry also requested a Rapid Financing Instrument (RFI) and the IMF has subsequently informed him that India had also made representations on behalf of Sri Lanka for an RFI.

    The Sri Lankan government decided last week to suspend repayment of all debts for an interim period till it has an orderly and consensual debt restructuring programme supported by the IMF.

    India has also appealed to the IMF on behalf of Sri Lanka, according to the statement. Sitharaman further affirmed to Sabry that India will support the Sri Lankan request to speed up an Extended Fund Facility from IMF.

    “Sitharaman has assured Minister Ali Sabry on India’s fullest support to Sri Lanka to move forward and has emphasized on India’s commitment to strengthen the development of the economy in Sri Lanka and building stronger bonds between the two Nations as they move forward together,” the statement noted.

    Meanwhile, IMF chief has appreciated India’s help to Sri Lanka in tackling its economic crises while assuring Finance Minister Nirmala Sitharaman that the financial institution would continue to actively engage with the island nation.

    Sri Lanka is now facing its worst economic crisis since gaining independence in 1948. The recession is attributed to foreign exchange shortages caused by a clampdown on tourism during the COVID-19 pandemic. It left the country unable to buy enough fuel, with people facing an acute scarcity of food and basic necessities, heating fuel, and gas.

    The economic situation has led to huge protests with demands for the resignation of Prime Minister Mahinda Rajapaksa and President Gotabaya Rajapaksa.

    ALSO READ: India backs Lanka, bats for IMF bailout

  • India backs Lanka, bats for IMF bailout

    India backs Lanka, bats for IMF bailout

    Sitharamaan and the top level Indian economic delegation met Sabry at the IMF headquarters in Washington on Monday….writes SUSITHA FERNANDO

    India has once again backed Sri Lanka, which is grappling with its worst ever economic crisis, by affirming full support to expedite International Monitory Fund’s Extended Fund Facility (EFF).

    India’s Finance Minister Nirmala Sitharaman has affirmed her Sri Lankan counterpart Ali Sabry that India will fully support the deliberations of the island nation with the IMF, especially on the special request made for expediting the EFF, Sri Lanka’s Finance Ministry said.

    Sitharaman and the top level Indian economic delegation met Sabry at the IMF headquarters in Washington on Monday.

    “Sitharaman has assured Sabry on India’s full support to Sri Lanka to move forward and has emphasised on India’s commitment to strengthen the development of the economy in Sri Lanka and building stronger bonds between the two nations as they move forward together,” the ministry said in a statement.

    Sri Lanka has made a request for a Rapid Financing Instrument (RFI) with the IMF and the world financial body has in turn informed the country’s Finance Minister that India had also made representations on behalf of Sri Lanka for an RFI.

    “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 Finance Ministry said.

    Sabry, meanwhile, has met IMF’s Managing Director Kristalina Georgieva in Washington.

    The IMF has commended the island nation on the steps already taken by Sri Lanka to mitigate the financial situation and has assured its fullest support. A positive response has also been received to expedite the process to strengthen the support extended towards Sri Lanka, the ministry added.

    Facing a burning crisis with dried dollar reserves and inflation, Sri Lanka is totally dependant on support of neighbouring countries like India and is depending on an IMF bailout package to avert the worst economic repercussion which would has led to social and political turmoil in the country.

    With just $1.6 billion in hand, the country’s foreign debt obligation for this year exceeds $7 billion. For the first quarter in 2022, India has helped Sri Lanka with nearly $2.5 billion in currency swap and other assistance, including food, fuel and medicines.

    ALSO READ: The fall of Lanka: A lesson for debt-trapped nations