Sri Lanka in talks with India finance minister on fresh trade credits and re-structuring

ECONOMYNEXT – Sri Lanka’s envoy in New Delhi Milinda Moragoda has met the Finance Minister Nirmala Sitharaman over expanding trade credits and re-structuring already provided, the country’s High Commission (embassy) in India said.

“The High Commissioner reiterated that Sri Lanka would require bridging finance until the economic adjustment programme with the IMF could be negotiated and finalized,” the High Commission in a facebook.com post.

“In this context, the Minister and the High Commissioner explored the possibility of increasing and restructuring the assistance provided by India in the form of credits for essential commodities and fuel as well as balance of payment support.”

However credit lines are exempt from Sri Lanka’s debt suspension announcement as well as as any loans given after April 12.

India has provided 500 million dollars of trade credit for fuel and a billion US dollars for essential imports. Sri Lanka is seeking another 500 million US dollars in credits fuel, this time for 7 years, energy minister Kanchana Wijesekera said.

Sri Lanka has failed to restore monetary stability through a float and is still seeing forex shortages from a broken soft-pegged exchange regime with money printing still continuing.

Sri Lanka will not be able to service any re-structured debt unless monetary stability is restored analysts had warned.

High Commissioner Moragadoa had thanked India for support given for Sri Lanka in negotiations with the International Monetary Fund.