Home News india sri lanka news: India to step up assistance as Sri Lanka stares at bankruptcy

india sri lanka news: India to step up assistance as Sri Lanka stares at bankruptcy

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india sri lanka news: India to step up assistance as Sri Lanka stares at bankruptcy

India is expected to step up economic aid to Sri Lanka as the country nears bankruptcy and its available foreign exchange reserves fall to less than $50 million.

ET has been informed that the new aid is likely to focus on humanitarian needs, with the two governments in close contact. The Sri Lankan government has sought urea supply from India. Earlier, India provided fuel, medicine and rice.

Sri Lanka’s cabinet recently approved a proposal to procure more fuel from India through a $200 million short-term loan facility provided by the Export-Import Bank of India.India provides nearly $3 billion to cash-strapped Sri Lanka through currency swaps, necessities credit lines and deferred loans since January 2022

Lanka’s bus and train network was suspended and offices and factories were deserted on Friday amid a nationwide strike demanding the government’s ouster.

Sri Lanka’s finance minister said on Wednesday that the country’s economy was struggling and its available foreign exchange reserves fell to less than $50 million.

Finance Minister Ali Sabri addresses parliament after returning to Sri Lanka following talks with the International Monetary Fund.

He said any IMF bailout, including the fast-track financing facility needed to urgently address shortages of basic commodities, would depend on negotiations with creditors on debt restructuring and would take six months to implement. The country plans to repay $7 billion of the $25 billion in foreign loans by 2026.

Sabri – who resigned on April 4, the day after his appointment, and then returned – warned “we’ve overrun two and a half times already”. “Total revenue of Rs 15,000 crore (Sri Lanka) in 2021 … spending of Rs 35,220 crore … we are living (beyond) our capacity…” He warned MPs that World Bank or IMF aid would not solve Deep-rooted problems.

“The IMF is not Aladdin’s magic lamp,” he said. Last week, the World Bank said it would provide $600 million in aid to help Sri Lanka meet payment requirements for essential imports.

On Thursday, Sabri told parliament that Sri Lanka has lost about half a million taxpayers each in 2020 and 2021 after implementing ill-timed tax cuts. Sabri claimed that the prolonged and intermittent lockdowns caused by the pandemic have kept the economy from delivering on the tax cuts originally expected.

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