Only India is providing money for fuel, Sri Lankan PM says amid crisis

Economic Crisis in Sri Lanka: Sri Lanka is facing the worst economic crisis since gaining independence.


Prime Minister Ranil Wickremesinghe said on Wednesday he had urged IMF chief Kristalina Georgieva to “speed up” her aid program to Sri Lanka, stressing that no country but India was providing money for fuel to the crisis-hit island nation.

The talk between Wickremesinghe, who is also finance minister, and the chief executive of the International Monetary Fund comes as Sri Lanka has decided to seek the support of the Washington-based global lender to combat its worst economic crisis since independence from Britain in 1948. The Talks between Sri Lanka and the IMF began on April 18th.

Sri Lanka has already initiated measures to restructure its external debt – a prerequisite for an IMF program – after the government announced on March 12.

Speaking to Parliament, Wickremesinghe said he had a telephone conversation with Georgieva on Tuesday during which she was briefed on Sri Lanka’s need for bridge funding.

“I asked them to expedite this process because we need bridge funding. Both our arrangement and our debt restructuring plan, which we are not familiar with, were discussed,” he said.

“I’m doing my best to move this forward and get funding no later than September,” Wickremesinghe added, as his cash-strapped government tries to raise $6 billion to keep the country afloat for the next six months.

Referring to a planned strike by engineers at the Ceylon Electricity Board (CEB), a state energy agency, Wickremesinghe said: “Please don’t cause blackouts, you can hold up placards and strike.” “If you do, don’t ask me, India asking for help. No country is giving us money for fuel and coal. Only India is giving us money. Our Indian credit line is now nearing its end. We are talking about extending it.” ,” he said.

The Prime Minister said India could no longer help Sri Lanka. “Some in India are asking why they should help us. They ask us to help ourselves first before they can help us,” Wickremesinghe said.

CEB engineers announced on Wednesday that they will go on an indefinite strike from midnight to protest the government’s plan to amend the CEB law, the proposal of which will be tabled in parliament on Thursday.

The strike could potentially cause power outages in the country already grappling with its worst economic crisis in decades.

The CEB engineering unions say the new law would eliminate bidding on the purchase of power from private sources.

“We will resort to industrial action to stop this change,” said Ranjith Induwara of engineering union CEB.

Energy Minister Kanchana Wijesekara told parliament that the new law would not abolish the bidding process but would focus on sustainable energy projects approved by the Sustainable Energy Agency.

India has been helping Sri Lanka with thousands of tons of diesel and gasoline, alongside food and medical supplies to the crisis-hit country to ease acute fuel shortages in the indebted island nation.

India last month gave Sri Lanka an additional $500 million credit line to help the neighboring country import fuel as it struggled to pay for imports after its foreign exchange reserves plummeted recently, prompting a devaluation of its currency and rising inflation .

Amid the economic crisis and tight foreign exchange, India’s $500 million credit line for fuel imports has offered a lifeline to the island nation, where people are queuing for fuel, cooking gas and essentials.

In line with India’s Neighborhood First policy, New Delhi has provided over US$3.5 billion in assistance to the people of Sri Lanka this year alone to help them overcome their current difficulties.

Last Thursday, Wickremesinghe said the government was targeting $5 billion in repayments this year, plus another $1 billion to bolster the country’s reserves.

He said Sri Lanka’s bridging financing needs would depend on an agreement with the IMF.

Wickremesinghe told Parliament on Tuesday that Sri Lanka needs $5 billion to ensure people’s daily lives are not disrupted over the next six months.

“We must strengthen the rupee in line with citizens’ daily needs. Another $1 billion needed to strengthen the rupee. That means we need to raise $6 billion to keep the country afloat for the next six months,” he told lawmakers.

Speaking to representatives of the Joint Trade Chambers earlier this week, the Prime Minister had said that debt restructuring had started after financial and legal advisers had been appointed. He said ongoing negotiations with the global lender for a bailout could be completed by the end of this month.

Wickremesinghe’s talk with Georgieva came hours after he called on the IMF to hold a conference to unite Sri Lanka’s lending partners, according to Economy Next news outlet.

The near-bankrupt country, with an acute foreign currency crisis that led to a default on external debt, announced in April that it was repaying nearly $7 billion. The debt amounts to $51 billion.

The IMF said in May that it required the country to give “reasonable assurances” that it would restore debt sustainability during the debt restructuring process.

“With Sri Lanka’s public debt rated unsustainable, Executive Board approval of an IMF-supported program for the country would require adequate assurances that debt sustainability would be restored,” the IMF said.

The economic crisis has resulted in acute shortages of essential items such as food, medicine, cooking gas and other fuels, toilet paper and even matches, with Sri Lankans forced to queue for hours outside shops to buy fuel and cooking gas for months .

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