The China-backed Asian Infrastructure Investment Bank is considering granting $100 million in emergency support to Sri Lanka, the country’s finance ministry said on Sunday.
Sri Lanka has requested foreign-exchange liquidity support for state banks from the lender, it said in a statement. Hit hard by the pandemic, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa, the South Asian island’s economy is in crisis, with usable foreign reserves down to $50 million, Finance Minister Ali Sabry said last week.
Shortages of imported food, fuel and medicines have brought thousands onto the streets in over a month of mostly peaceful protests. Rajapaksa declared a second state emergency in five weeks on Friday.
The multilateral AIIB, founded in 2014 to promote infrastructure investing throughout Asia, draws most of its funding from China. China is Sri Lanka’s largest bilateral lender, with an outstanding balance of $6.5 billion mostly lent over the past decade for large infrastructure projects, including highways, a port, an airport and a coal power plant.
Beijing has extended Sri Lanka a $1.3 billion syndicated loan and a $1.5 billion yuan-denominated swap to boost its reserves. The two countries are in talks for a $1.5 billion credit line and a fresh syndicated loan of up to $1 billion.
Colombo said this month that talks had started on refinancing Chinese debt after Sri Lanka suspended some of external debt repayments in April.
(Reporting by Uditha Jayasinghe; Writing by Alasdair Pal; Editing by Christian Schmollinger and William Mallard)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.