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Sri Lanka in talks for $100 mn emergency funding from China-backed bank

Sri Lanka has requested foreign-exchange liquidity support for state banks from Asian Infrastructure Investment Bank.

Topics
sri lanka | South Asia | China GDP growth

Reuters  |  Colombo 

Sri Lanka
People leave after being informed by the manager of a fuel station in Colombo that they are out of kerosene. Sri Lankan fuel pumps may go dry by the end of this month with the $500 million Indian fuel credit line purchase exhausting fast. Photo: Reut

The China-backed Asian Infrastructure Investment Bank is considering granting $100 million in emergency support to Sri Lanka, the country's finance ministry said on Sunday.

has requested foreign-exchange liquidity support for state banks from the lender, it said in a statement. Hit hard by the pandemic, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa, the South Asian island's is in crisis, with usable foreign reserves down to $50 million, Finance Minister Ali Sabry said last week.

Shortages of imported food, fuel and medicines have brought thousands onto the streets in over a month of mostly peaceful protests. Rajapaksa declared a second state emergency in five weeks on Friday.

The multilateral AIIB, founded in 2014 to promote infrastructure investing throughout Asia, draws most of its funding from China. China is Sri Lanka's largest bilateral lender, with an outstanding balance of $6.5 billion mostly lent over the past decade for large infrastructure projects, including highways, a port, an airport and a coal power plant.

Beijing has extended a $1.3 billion syndicated loan and a $1.5 billion yuan-denominated swap to boost its reserves. The two countries are in talks for a $1.5 billion credit line and a fresh syndicated loan of up to $1 billion.

Colombo said this month that talks had started on refinancing Chinese debt after suspended some of external debt repayments in April.

(Reporting by Uditha Jayasinghe; Writing by Alasdair Pal; Editing by Christian Schmollinger and William Mallard)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Sun, May 08 2022. 16:03 IST
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