Sri Lanka will convene China, India and Japan to a donor conference to mobilize more foreign aid to find a way out of its deepening economic crisis, the prime minister said on Wednesday. ongoing talks with the International Monetary Fund (IMF).
The island nation of 22 million people is in the grip of its worst financial crisis in seven decades, unable to import essentials including food, fuel and medicine due to a severe shortage of foreign currency.
Shortages of basic necessities and soaring inflation have caused public unrest, prompting the government of Prime Minister Ranil Wickremesinghe to redouble its efforts to bring in aid from countries like the IMF and friendly countries.
“We need the support of India, Japan and China who are historical allies. We plan to convene a donors’ conference with the participation of these countries to find solutions to the Sri Lankan crisis,” he said. declared Prime Minister Wickremesinghe in Parliament.
“We will also ask for help from the United States,” he said.
A high-level Indian delegation will arrive on Thursday for talks on further support from New Delhi, and a US Treasury team will visit next week, Prime Minister Wickremesinghe said.
India has so far provided around $3 billion in aid, including a $400 million swap and credit lines totaling $1.5 billion.
China, which traditionally jostles with New Delhi for influence on the Indian Ocean island, is considering an appeal from Sri Lanka to renegotiate the terms of a yuan-denominated swap worth 1.5 billion dollars to finance essential imports.
Talks with the IMF
Negotiations with an IMF team, which arrived in Sri Lanka’s commercial capital Colombo this week, have progressed, with a staff-level agreement with the lender likely by the end of the month, Wickremesinghe said.
“We discussed several points, including fiscal policy, debt restructuring and direct cash transfers,” he said.
“Along with this, we have also started discussions on a debt restructuring framework, which we hope will be completed in July.”
Sri Lanka, which suspended payment of $12 billion in external debt in April, is asking the IMF about $3 billion to get its public finances back on track and access bridge financing.
Wickremesinghe said once an IMF deal is reached, his government will focus on a plan to increase Sri Lanka’s exports and stabilize the economy.
“It is not an easy task to revive a country whose economy has completely collapsed,” he said, calling on the opposition to support his economic recovery plan.
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