Sri Lanka seeks USD 4 B to finance essential imports for rest of the year

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The Government has identified that about USD 4 billion is needed to fulfill essential foreign exchange demands; mainly to finance Pharmaceuticals, fuel and gas, over the next six months of this year, a spokesman of the Prime Minister’s Office told Finance Today.

To meet these needs, the government is looking forward to an additional USD 1 billion swap facility from India and USD 500 million in fuel loan assistance within the next few weeks. Apart from that, the government says that no other bilateral and  multilateral assistance programme has been available so far to finance the Essential imports.

The Prime Minister’s office has also observed that if these foreign exchange requirements are not met, the lives of the people in the country will soon be disrupted and the country is more likely to embark on a serious civil struggle with the rising inflation scenario.

The Government recognises that it is essential to sign at least a Staff Level Agreement with the International Monetary Fund (IMF) within the next 4-5 weeks to meet the international credibility and confidence required to meet these additional external funding requirements.

“A staff-level agreement, which is  an agreement between IMF staff and the Central Bank on the content of the possible IMF assistance, could increase confidence bring foreign investment into capital markets, encourage more exporter conversions and remittances into official channels,  ex-Central Bank Governor Indrajit Coomaraswamy  said  on Thursday .

Accordingly, the Prime Minister has made arrangements to make a request to the heads of the International Monetary Fund (IMF) regarding the possibility of concluding this agreement as soon as the  ongoing virtual technical and policy level discussions of the International Monetary Fund (IMF) on Sri Lanka are concluded.

The International Monetary Fund (IMF)’s delegation will have to make an observation tour if the talks are to be successful, but a government spokesman said they were afraid to come here because of events in the country since 9 May.

By Ishara Gamage