Sitharaman assures Sri Lanka of all possible assistance from India
Finance Minister Nirmala Sitharaman on Tuesday "assured all possible cooperation" to her Sri Lankan counterpart Ali Sabry on the sidelines of IMF-WB Spring Meetings in the US. Sri Lanka is reeling under a massive financial crisis with hours-long blackouts and a shortage of fuel and other essential commodities. Amid mounting public anger, President Gotabaya Rajapaksa recently appointed a new cabinet to signal political stability.
'India will try to extend all possible cooperation'
The Finance Ministry tweeted that Sitharaman and Sabry met in Washington and "discussed current economic situation and its approach towards addressing the prevailing challenges in Sri Lanka." In a separate tweet the ministry further stated that Sitharaman had "assured Sri Lanka that as a close friend and good neighbor, India will try to extend all possible cooperation and assistance."
Why does this story matter?
This development comes after reports surfaced last week that India could provide an additional aid of up to $2B to Sri Lanka. To note, it has reportedly already committed $1.9B to Colombo so far in the form of credits for fuel and essential commodities, loans, and currency swaps. India is trying to "regain ground lost to China in recent years" with these moves.
India already extended $1.5B financial assistance to Lanka
Notably, New Delhi has already extended financial aid worth more than $1.5 billion to Colombo to help it tackle its worst-ever financial crisis. This included two lines of credit to help the country buy fuel, food, and medicines. Meanwhile, International Monetary Fund's (IMF) Managing Director Kristalina Georgieva, who met Sitharaman in Washington on Tuesday, also appreciated India's aid to Sri Lanka.
Lanka seeks loan from IMF under RFI window
On the other hand, Sabry's aide Shamir Zavahir tweeted Colombo has sought a loan from the IMF under the rapid financial instrument (RFI) window. It is meant for meeting the urgent balance-of-payment needs of member nations. Zavahir said negotiations with the IMF began on a positive note, adding the global body noted the country has taken "good first steps" for a possible restructuring program.
'IMF may consider request due to the unique circumstances'
Zavahir further tweeted that Lankan Finance Minister Sabry requested the IMF for a "Rapid Financing Instrument (RFI) to mitigate the current supply chain issues." He added the IMF was not initially inclined toward the same. However, India later made representations for Lanka in the matter, and now "the IMF may consider this request due to the unique circumstances," Zavahir said in a tweet.
