As Sitharaman assures support to Sri Lanka, IMF praises India’s help amid crisis

Finance minister Nirmala Sitharaman, who is in the United States, on Monday assured help to Sri Lanka, which is facing one of its worst-ever financial crises.

India will “try to extend all possible cooperation” to the neighbouring country, a tweet by the ministry of finance read as Sitharaman met her counterpart Ali Sabry.

India’s assistance was also appreciated by the IMF ( International Monetary Fund) chief Kristalina Georgieva as she met the union finance minister, adding that the global institution will continue to engage with Sri Lanka, news agency PTI reported.

India has extended financial assistance worth more than $1.5 billion, including two lines of credit for purchasing fuel, food and medicines, to help the neighbouring nation tackle the current challenges.

Sri Lanka has also been witnessing one of the biggest unrests in history amid mounting public anger as people face shortage of fuel and other essentials and blackouts.

On Monday, president Gotabaya Rajapaksa appointed a new cabinet to send out a message of political stability. He also admitted that the public anger – amid the shortage of essentials – was justified.

The country has sought rapid assistance from the IMF, an aide to the country’s finance minister tweeted on Tuesday. “Negotiations with IMF started on a positive note today. They see the recent steps taken to increase the interest rates and calling for RfP’s for the appointment of Intl. Financial/Legal Advisors as good first steps towards a possible restructuring Programme,” Shamir Zavahir said.

“The finance minister made a request for a Rapid Financing Instrument (RFI) to mitigate the current supply chain issues,yet initially IMF of the view that it doesn’t meet their criteria. However,India subsequently made representations on an RFI for SL as well and the IMF may consider this request due to the unique circumstances. In any event, the IMF appears to be positive towards granting an Extended Fund Facility (EFF). Ideally if this can be expedited,it can help stabilize things in the short term till long-term solutions kick in,” he tweeted.