Sri Lanka is hoping to get $5 billion from multilateral agencies as loans next year along with an IMF deal, as the government is working towards raising around $3 billion through restructuring of state assets, Sri Lanka’s Foreign Minister Ali Sabry told Reuters on Wednesday.
The nation recently witnessed widespread protest because of a shortage of fuel and food as it battled its worst economic crisis which occurred in more than seven decades. The protests resulted in ousting of Sri Lanka’s then-President Gotabaya Rajapaksa in July.
Additional funds are important for the Sri Lankan government which is burdened with a public external debt amounting to $40.6 billion, 22% of which it owes to Chinese creditors. An agreement was reached between Sri Lanka and the IMF in September for a loan of $2.9 billion, which may get approval for disbursal next year.
“Apart from what we get from the IMF, we are looking at all others, the multilaterals put together another $4-$5 billion,” said the foreign minister in an interview.
“The president is interested in restructuring some of the (state) institutions, so through that if we can raise $2-$3 billion, then what happens is that our treasury and reserves become strengthened,” he added. The minister stated that Sri Lanka was looking forward to getting approval from the IMF board for the loan in December; however, it has been likely postponed to January.
The government is working towards finalising financing assurances from nations like India, China and Japan, along with private creditors. The foreign minister said that the government is yet to receive “letters of assurance” for restructuring of debt from India as well as China, which is its largest bilateral creditor.
The minister added that the restructuring efforts have been supported by the two nations and that the required data and documents have been shared by Sri Lanka.
“We are very, very clear, both to the IMF and to our multilateral partners and to our bilateral friends that patience is running out and it is urgent for the sake of Sri Lankans and the good health of the world economy,” said FM Sabry.
He stated that there has been improvement in the economy of Sri Lanka overall due to regular imports of essentials like food and fuel. The country’s inflation had increased above 70% earlier this year, however, it eased to 61% by November end and it is expected that the economy will contract by about 8.7% by the year’s end.
“Some stability is taking place. Then the growth can return. So that should start in the next quarter of next year with the IMF loan coming in, other multilateral agencies coming in. But the growth to take place, it is going to be 2024 if everything goes according to plan,” said Sabry.
(With inputs from agencies)
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