Sri Lanka seeks bridge loans as IMF aid will take 6 months

SRI LANKA is reaching out to several nations for bilateral credit as a comprehensive aid package from the International Monetary Fund may require about six months. 

India is providing “every conceivable assistance,” Foreign Minister GL Peiris told reporters at a briefing in Colombo on Wednesday, adding that he will be meeting the Chinese ambassador on Thursday. Sri Lanka is also seeking help from Japan, Oman, Qatar and the Gulf Cooperation Council countries. 

Talks with the IMF are going well and the nation is still hopeful of rapid aid under an emergency program, Peiris said. But a full package will need about six months and “we need to find bridging finance.”

Sri Lanka is seeking as much as US$4 billion in emergency aid this year to help ease hours long power cuts, shorten fuel lines that go on for miles, and pay for imports of lifesaving drugs and food. Islandwide demonstrations seeking the ouster of President Gotabaya Rajapaksa turned deadly on Tuesday, when police killed at least one person and wounded several others as they opened fire on protesters. 

Prime Minister Mahinda Rajapaksa - the president’s brother - on Tuesday promised to trim the president’s powers, the government’s biggest concession yet as it seeks to stay in power. However, he hasn’t elaborated on the details of the constitutional changes he proposes and it’s not clear if this will placate protesters.

Policy makers are currently in Washington seeking a bailout from the IMF. The delegation’s visit follows the central bank’s decision this month to raise interest rates by a record 700 basis points. State-run Ceylon Petroleum on Tuesday increased petrol prices for a second time in April as imports become costlier after authorities ran out of dollars to defend a currency peg and allowed the rupee to float free. 

“Those difficulties are not going to come to an end today or tomorrow,” Peiris said. “We have a strong government in place, that’s what matters” when negotiating with foreign governments and multilateral institutions, he added. BLOOMBERG