Faced with an unprecedented economic crisis, Sri Lankan has sought a bridge financing to cover the imports of food, and other essentials from India, as negotiations with the International Monetary Fund (IMF) for a financial assistance package, are likely to take weeks.

On Friday, Sri Lankan High Commissioner in New Delhi Milinda Moragoda met with Indian Finance Minister Nirmala Sitaraman to discuss possibilities of increasing assistance and restructuring earlier loan facilities provided by New Delhi.

During his meeting with Sitharaman, the Sri Lankan envoy conveyed that Colombo was seeking support for a line of credit for essential imports and a balance of payment. Both sides agreed that the established official-level mechanism for conducting the economic dialogue between the two countries should continue, reported Daily Mirror.

The Russian foreign ministry has confirmed that it had received a request from Sri Lanka in procuring fuel and it was under consideration.

On the same day, Sri Lanka Prime Minister Ranil Wickremesinghe also held virtual discussions with the technical team of the IMF. The food crisis has been growing in Sri Lanka and there has been renewed concern about a possible decline in agriculture productivity this year as well.

Sri Lanka will require fertilizers worth over $500 million this year and the government has sought fertilizers both from India and China. New Delhi had earlier assured of all possible help. While New Delhi has extended assistance worth over $3 billion this year, China has yet to extend any significant help despite Colombo’s repeated request.

However, recent media reports showed that both Beijing and Sri Lanka are currently in talks for possible assistance.

In an interview to Financial Times this week, PM Wickremesinghe has assured New Delhi, dismissing concerns that China’s assistance to Colombo would complicate its ties with India. “With India, we’ve had a special relationship and as long as we don’t do anything to harm India’s national security, we can get along,” he said.

Sri Lanka announced a default on its all external loans, totaling over $51 billion, in April, soon after the IMF assessed that Colombo’s debt level had reached to an unsustainable level.

Indian Prime Minister Narendra Modi and his Japanese counterpart Fumio Kishida had also discussed the “situation in Sri Lanka” and stressed cooperating with each other to address the deteriorating economic and humanitarian situation in the island country, according to a statement issued by Japan’s foreign ministry.
Japan has been one of the development partners of Sri Lanka, extending both grants and soft loans for various projects in Sri Lanka. (SAM)