ECONOMYNEXT – Sri Lanka’s envoy to New Delhi, Milinda Moragoda, has met Finance Minister Nirmala Sitharaman over the already planned trade credit expansion and restructuring, the country’s high commission (embassy) said in India.
“The High Commissioner reiterated that Sri Lanka would require bridge financing until the economic adjustment program with the IMF can be negotiated and finalized,” the High Commission posted on Facebook.
“In this context, the Minister and the High Commissioner explored the possibility of increasing and restructuring the assistance provided by India in the form of credits for essential goods and fuel as well as support for the balance of payments”.
However, the lines of credit are exempt from Sri Lanka’s debt suspension announcement as well as any loans granted after April 12.
India provided $500 million in trade credit for fuel and US$1 billion for essential imports. Sri Lanka is seeking an additional $500 million in fuel credits, this time for 7 years, Energy Minister Kanchana Wijesekera has said.
Sri Lanka has failed to restore monetary stability through a float and is still experiencing currency shortages due to a broken loosely pegged exchange rate regime, with money printing still continuing.
Sri Lanka will not be able to service restructured debt unless monetary stability is restored, analysts had warned.
High Commissioner Moragadoa thanked India for supporting Sri Lanka in negotiations with the International Monetary Fund.