COLOMBO: Sri Lanka seeks about $3 billion in external assistance within the next six months to help restore supplies of essential items, including fuel and medicines, to manage a severe economic crisis, Finance minister Ali Sabry told Reuters on Saturday.
The island nation of 22 million people has been hit by power cuts and shortages which have drawn protesters out on to the streets and put President Gotabaya Rajapaksa under mounting pressure.
“It’s a Herculean task,” said Sabry in his first interview since taking office this week, referring to finding $3 billion in bridge financing as the country readies for negotiations with the International Monetary Fund (IMF) this month.
The country will look to restructure international sovereign bonds and seek a moratorium on payments, and is confident it can negotiate with bondholders over a $1 billion payment due in July.
“The entire effort is not to go for a hard default,” Sabry said. “We understand the consequences of a hard default.”
J.P. Morgan analysts estimated this week that Sri Lanka’s gross debt servicing would amount to $7 billion this year, with a current account deficit of around $3 billion.
The country has $12.6 billion in outstanding international sovereign bonds, central bank data showed, and foreign reserves of $1.9 billion at the end of March.
Minister Ali Sabry will lead a delegation of Sri Lankan officials to Washington to start talks with the IMF on April 18 and that financial and legal advisers would be selected within 21 days to help the government restructure its international debt.
- Tax & Fuel price increase
Minister Sabry told Reuters that the government will hike taxes and fuel prices within six months and seek to reform loss-making state-owned enterprises, in an effort to fix public finances.Reuters
