Sri Lanka will invite China, India, and Japan to a donor conference to seek more foreign aid to help it overcome its rapidly deteriorating economic crisis, the prime minister said on Wednesday, amid continuing talks with the International Monetary Fund (IMF). The 22-million-person island nation is experiencing its worst economic meltdown in seven decades, unable to import essentials such as food, fuel, and medicines due to a severe lack of foreign exchange.
The lack of basic necessities and spiraling inflation have sparked public outrage, prompting Prime Minister Ranil Wickremesinghe’s government to step up efforts to secure assistance from the IMF and friendly countries.
“We need the help of India, Japan, and China, who have long been allies. We intend to hold a donor conference with the participation of these countries to find solutions to Sri Lanka’s crisis “Wickremesinghe informed parliament.
“We will also seek assistance from the United States,” he said.
According to PM Wickremesinghe, a high-level diplomat from India will arrive on Thursday for talks on extra assistance from New Delhi, and a team from the US Treasury will visit next week.
India has so far provided approximately $3 billion in assistance, including a $400 million swap and $1.5 billion in credit lines.
China, which has traditionally competed with New Delhi for affect over the Indian Ocean island, is considering Sri Lanka’s request to renegotiate the terms of a $1.5 billion yuan-denominated swap to fund essential imports.
Agreements with an IMF team, which reached in Sri Lanka’s commercial capital Colombo this week, are progressing, with a staff-level agreement with the lender expected by the end of the month, according to Wickremesinghe.
“We talked about a variety of topics, including fiscal policy, debt restructuring, and direct cash transfers,” he said.
“At the same time, we have begun discussions on a debt relief framework, which we hope to complete by July.”
Sri Lanka is seeking approximately $3 billion from the IMF to get its public finances back on track and connect directly bridge financing after suspending payments on $12 billion in foreign debt in April.
Wickremesinghe stated that once an arrangement with the IMF was reached, his government will indeed focus on a plan to boost exports and stabilise the economy.
“Reviving a country with a completely collapsed economy is no easy task,” he said, urging opposition support for his financial recovery plan.