New DelhiTwo sources told Reuters that India is not planning to provide fresh financial aid to Sri Lanka on top of the nearly $4 billion raised this year as the island’s battered economy begins to stabilize after an initial loan agreement with the IMF . India has been the biggest aid provider this year to its southern neighbour, which is battling its worst economic crisis in more than seven decades and struggling to pay for imports, though the situation is now changing for May and July. Less severe than the middle.
An Indian government source with direct knowledge of discussions with Sri Lanka told Reuters: “We’ve already given $3.8 billion in aid. Now it’s about the IMF.” “Countries cannot continue to provide aid.”
A Sri Lankan government source said India’s decision was not a surprise and New Delhi had “signaled” to them a few months ago that there was massive support ahead.
However, the source said India would be invited to a donor conference that Sri Lanka was planning to organize later this year along with Japan, China and possibly South Korea. Another Sri Lankan government source said a $1 billion swap arrangement between India and Sri Lanka and its request for a second credit line of $500 million for fuel purchases made in May had made little progress. .
The sources declined to be named as they were not authorized to speak to the media. India’s finance ministry, and Sri Lanka’s finance ministry and its central bank did not immediately respond to requests for comment.
Sri Lanka and IMF Preliminary Agreement
Sri Lanka and the IMF reached a preliminary agreement in early September for a loan of about $2.9 billion, which is dependent on the country receiving financial assurances from official creditors and negotiations with private creditors.
One of the Sri Lankan sources said, “Our focus is more on taking the IMF program forward and getting ourselves out of this mess.” Sri Lanka is using its limited foreign exchange reserves to meet fuel imports and to redeploy funding from multilateral agencies for other important imports including fertilisers, cooking gas and medicine, another Sri Lankan source said.
The country of 22 million people is grappling with shortages of essential commodities including fuel, food and medicines, months after a record drop in its foreign exchange reserves, stalled imports and unprecedented public unrest.