Sri Lanka hopeful of obtaining further Indian aid of USD 1.5 billion: Foreign Minister

COLOMBO: The Sri Lankan government has said that there is a possibility of it obtaining a further USD 1.5 billion in aid from India, weeks after New Delhi announced a billion-dollar assistance package and a balance of payment support to the island nation which is facing a severe foreign exchange crisis.

Foreign Minister G L Peiris told reporters in the central town of Kandy on Sunday that further Indian assistance was forthcoming.

(Finance minister) Basil Rajapaksa, as a result of his talks held in (New) Delhi with madam (India's Finance Minister) Nirmala Sitharaman and foreign minister Dr S Jaishankar, was able to obtain a relief package.

"Similarly, there is a possibility of us obtaining a further 1.5 billion dollars," Peiris said.

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He also said that the option of approaching the International Monetary Fund (IMF) was still on the table.

"The doors are still open, we are a member of that organisation (IMF)," Peiris said, adding that the government, however, would be wary of tough conditions being imposed.

The minister claimed that despite the foreign exchange crisis, Sri Lanka has not hit the rock bottom yet.

The government is rejecting the option of going for an economic bailout package from the IMF.

The Cabinet is also divided on the issue of approaching the US-based global financial institution.

Earlier this month, India announced a USD 400 million currency swap facility to improve Sri Lanka's gross reserves and deferred the Asian Currency Union settlement of USD 515 million which the local analysts said stopped the bleeding of reserves.

New Delhi also announced a billion-dollar assistance package in addition to other balance of payment support for the island nation.

The billion-dollar loan credit facility is to be used to avert a food crisis while allowing for the import of items and medicines.

Additionally, there will be USD 500 million for importing fuel from India.

Sri Lanka is currently facing a severe foreign exchange crisis with falling reserves. The country is grappling with a shortage of almost all essentials due to the lack of dollars to pay for the imports.

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Additionally, power cuts are imposed at peak hours as the state power entity is unable to obtain fuel to run turbines.

The state fuel entity has stopped oil supplies as the electricity board has large unpaid bills. The only refinery was recently shut as it was unable to pay dollars for crude imports.

The Sri Lankan government is also in talks with China to overcome the current financial crisis.

During the visit of Chinese Foreign Minister Wang Yi to Colombo earlier this month, President Gotabaya Rajapaksa requested Beijing's assistance in mitigating his country's deepening forex crisis and spiralling external debt, saying it will help Colombo to the best of its capacity.