SL seeks India’s support to secure bridge financing

NEW DELHI: Sri Lanka has sought India’s assistance in garnering international support to secure bridge financing as it enters negotiations with the International Monetary Fund (IMF) for a bailout programme to cope with the island nation’s worst economic crisis in decades.

The issue of India’s support for securing both bridge financing and the economic adjustment programme with the IMF figured when Sri Lanka’s high commissioner Milinda Moragoda met finance minister Nirmala Sitharaman in New Delhi on Wednesday.

On Tuesday, Sri Lanka declared it would default on its external debt pending a bailout from the IMF. The move was attributed to the country’s critically low foreign exchange reserves.

This was the first time Sri Lanka has announced a debt default since its independence in 1948. In addition to reviewing bilateral economic cooperation, Moragoda and Sitharaman discussed how India can assist Sri Lanka in getting international support to secure bridge financing and the IMF economic adjustment programme itself, through both bilateral and multilateral partners, according to a statement from the Sri Lankan high commission.

They also explored the possibility of enhancing and restructuring some of the assistance already provided by India in the form of credits for essential commodities and fuel, as well as balance of payment support.

Moragoda and Sitharaman observed that the assistance provided by India so far “could form part of the bridging finance required by Sri Lanka until the economic adjustment programme with the IMF would be negotiated”, the statement said.

“It was also observed that India was the first country to support Sri Lanka in this manner to secure bridging finance until that programme would be in place,” the statement added.

Sitharaman expressed her concern over the humanitarian cost of the economic crisis and said “India would stand by Sri Lanka to overcome its challenges”. Moragoda thanked her for her personal interest in supporting Sri Lanka at this difficult time. The process of negotiating a bailout with the IMF is expected to take at least six months, if not more. In the interim, the Sri Lankan government will have to work out a bridge financing arrangement to take care of its immediate needs.