Colombo - Sri Lanka will need $5 billion over the next six months to ensure basic living standards, and is renegotiating the terms of a yuan-denominated swap worth $1.5 billion with China so as to fund essential imports, the prime minister said on Tuesday.
The island nation's worst economic crisis in seven decades led to a shortage of foreign exchange that stalled imports of essential items such as fuel, medicine and fertiliser, provoking devaluation, street protests and a change of government.
The next three weeks will be tough for Sri Lanka in regards to fuel, Prime Minister Ranil Wickremesinghe told the Parliament on Tuesday.
Wickremesinghe also hinted that there will be further price increases of fuel. "The country spends $500 million per month on fuel.” With the raising oil prices, he said $3,300 million worth of fuel is required for the next six months.
$250 million of gas is required for the next six months, import of foodstuffs will cost $150 million, imported fertilizer of $600 million, which adds up to a total of $5 billion. Another $1 billion is required to strengthen the rupee.
The central bank has estimated the economy will contract by 3.5% in 2022, Wickremesinghe said, but added that he was confident growth could return with a strong reform package, debt restructuring and international support.
The Indian Ocean nation of 22 million is negotiating a loan package worth about $3 billion from the International Monetary Fund, in addition to help from countries such as China, India and Japan.
On Tuesday, the cabinet approved a $55-million credit line from India's Exim Bank to fund 150,000 tonnes of urea imports - a critical requirement as supplies have run out during the current cropping season.
The United Nations is set to make a worldwide public appeal for Sri Lanka on Wednesday, and has pledged $48 million for food, agriculture and health, Wickremesinghe said.
Wickremesinghe, who is also finance minister, will unveil an interim budget next month that he said aims to slash government expenses and looks to increase annual welfare spending to $500 million from about $350 million.
-Reuters