India, World Bank considering $2-billion bridge finance: Sri Lanka

Sri Lanka’s finance minister Ali Sabry said on Friday that its neighbour India and the World Bank are considering extending about $2 billion in bridge finance so it can continue essential imports.

The country of 22 million people is struggling to pay for imports after a sharp drop in foreign exchange reserves, which has led to a currency devaluation and soaring inflation.

Sri Lanka, which has $51 billion of external credit, is working on a wider plan to secure funds to help it through its worst economic crisis, with prolonged power cuts and shortages of fuel and medicines that have sparked nationwide protests. The government has asked some creditors to restructure its debt and also appr­oached China, Japan, and the Asian Develo­pment Bank amongst others for help, Sabry said.

$400-mn currency swap facility

India has extended the duration of the $400-million currency swap facility which had been concluded with the island nation in January. This was the first extension of an international debt instrument to Sri Lanka after the government led by President Gotabaya Rajapaksa on April 12 temporarily suspended debt servicing.