Not easy to revive country’s ‘completely collapsed economy’: Sri Lankan PM

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COLOMBO: Sri Lanka will call China, India, and Japan to a donor conference to drum up more foreign assistance and present an interim budget in August, the prime minister said on Wednesday, amid ongoing negotiations with the International Monetary Fund (IMF).

The island nation of 22 million people is struggling with its worst economic crisis in seven decades, unable to import essentials including food, fuel and medicines because of a severe shortage of foreign exchange.

An interim budget will be presented in August, seeking to put public finances on a more sustainable path and increase funds to the poor who have been hardest hit, Prime Minister Ranil Wickremesinghe told parliament.

“The interim budget will set the path forward. This, together with an IMF programme and debt sustainability, will lay the foundation for Sri Lanka to return to economic stability,” he said.

In late May, Wickremesinghe had told Reuters he would present an interim budget within six weeks, cutting government spending down “to the bone”.

The dearth of basic necessities and spiralling inflation has stroked public unrest, pushing Wickremesinghe’s government to redouble efforts to bring in assistance from the likes of the IMF and friendly countries.

“We need the support of India, Japan, and China who have been historic allies. We plan to convene a donor conference with the involvement of these countries to find solutions for Sri Lanka’s crisis,” Wickremesinghe told parliament.

“We will also seek help from the US,” he said, adding that his administration will use $70 million from the World Bank for buying cooking gas, which has been in short supply, setting off sporadic protests.

A high-level delegation from India will arrive on Thursday for talks on additional support from New Delhi, and a team from the US Treasury will visit next week, Wickremesinghe said.

India has so far provided around $4 billion worth of assistance, the prime minister said, including a $400 million swap and credit lines totalling $1.5 billion.

China, which has traditionally jostled with New Delhi for influence over the Indian Ocean island, is considering an appeal from Sri Lanka to renegotiate the terms of a yuan-denominated swap worth $1.5 billion to fund essential imports.–Agencies