Sri Lanka needs US$3 billion to stave off crisis, says finance minister
- Aid is needed for essential items like fuel and medicine; Sri Lanka will seek support from bilateral partners including China, the United States and Britain
- ‘It’s a Herculean task [but] we have no choice,’ Sri Lanka’s Finance Minister Ali Sabry said
Sri Lanka will need about US$3 billion in external aid in the next six months to help restore supplies of essential items including fuel and medicine, its finance minister said Saturday.
The island nation of 22 million people has been hit by prolonged 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,” Finance Minister Ali Sabry said in his first interview since taking office this week, referring to finding US$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 US$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.”
JP Morgan analysts estimated this week that Sri Lanka’s gross debt servicing would amount to US$7 billion this year, with a current account deficit of around US$3 billion. The country has US$12.55 billion in outstanding international sovereign bonds, central bank data showed, and foreign reserves of US$1.93 billion at the end of March.
“The first priority is to see that we get back to the normal supply channel in terms of fuel, gas, drugs … and thereby electricity so that the people’s uprising can be addressed,” Sabry said.