A senior Indian official has held talks with the Sri Lankan president and prime minister as India signals its willingness to go beyond the $4 billion in loans, swaps and aid it has already provided to its cash-strapped neighbor.
Sri Lanka is facing its worst economic crisis in seven decades, with severe foreign exchange shortages making it difficult to import basic goods such as food, fuel and medicine.
The island nation in India’s southeastern tip needs about $5 billion over the next six months to cover the basic needs of its 22 million people, who have been struggling with long lines, worsening shortages and power outages. .
Indian Foreign Secretary Vinay Kwatra, accompanied by Finance Ministry officials, held talks with President Gotabaya Rajapaksa and Prime Minister Ranil Wickremesinghe in the commercial capital Colombo, officials said Thursday.
“Underlined India stands ready to assist Sri Lanka in rapid economic recovery by promoting investment, connectivity and strengthening economic ties,” Indian Foreign Ministry spokesman Arindam Bagchi posted on Twitter.
The Indian team held a separate meeting with Wickremesinghe, the central bank governor and finance ministry officials, an official from the prime minister’s office said.
“The delegation will also hold talks with senior officials on the country’s economic situation and short-term and long-term assistance requirements,” the Sri Lankan Foreign Ministry said in a statement.
India has been the main source of foreign assistance to Sri Lanka this year, providing more than $4 billion, Wickremesinghe told parliament this week.
Neighbors are also in talks for additional support, including a $500 million credit line for fuel and help importing fertilizer and rice as Sri Lanka tries to avert a food crisis, officials said.
Sri Lanka plans to hold a donor conference with China, India and Japan, Wickremesinghe said, while continuing talks with the International Monetary Fund for a rescue package of some $3 billion.
A critical shortage of foreign exchange and rampant inflation have made life miserable for the 22 million people of the South Asian country.
Economy ‘has collapsed’: PM
Meanwhile, Sri Lanka’s parliament canceled its remaining sessions for the week to save fuel, officials said Thursday, with a disastrous economic crisis rapidly depleting the island nation’s already scarce gasoline supplies.
Parliamentary officials said politicians decided not to hold sessions on Thursday and Friday to avoid unnecessary use of gasoline, days after authorities closed schools and some state offices for the same reason.
Wickremesinghe told parliament on Wednesday that the nation’s economy had “collapsed” and was facing “a much more serious situation” than shortages, warning of “a possible drop to the bottom”.
“Our economy has completely collapsed,” he said. “Now we are facing a much more serious situation beyond mere shortages of fuel, gas, electricity and food.”
Energy Minister Kanchana Wijesekera said a shipment of gasoline due for delivery on Thursday was delayed and urged motorists to cut back on travel.
“Only limited amounts of gasoline will be distributed to pumping stations today and tomorrow,” he told reporters in Colombo, with motorists waiting in line for days to refill their tanks.
Economists and other Sri Lankans said they hoped the government would find ways to revive the economy.
“What the prime minister should do is not make any announcements. He has to come up with a plan to revive the system,” said WA Wijewardena, an economist and former deputy governor of the Central Bank of Sri Lanka.
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