Sri Lanka in talks with Beijing-backed bank for $100 million emergency aid

  • Last week, Finance Minister Ali Sabry stated that hit hard by the pandemic, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa, the South Asian island’s economy is in crisis, with usable foreign reserves down to $50 million, the report said.

The China-based Asian Infrastructure Investment Bank may give the much-needed relief Sri Lanka has been looking for. The country’s economy has taken a massive hit by the pandemic and rising oil prices. The Chinese bank is considering granting $100 million in emergency support to the South Asian country.
As per a Reuters report, Sri Lanka has requested foreign-exchange liquidity support for state banks from the lender.
Last week, Finance Minister Ali Sabry stated that hit hard by the pandemic, rising oil prices and populist tax cuts by the government of President Gotabaya Rajapaksa, the South Asian island’s economy is in crisis, with usable foreign reserves down to $50 million, the report said.
The Sri Lankan President declared a second state emergency in five weeks on Friday.
According to the report, China is Sri Lanka’s largest bilateral lender, with an outstanding balance of $6.5 billion mostly lent over the past decade for large infrastructure projects, including highways, a port, an airport, and a coal power plant.
Notably, Beijing had extended its support with a $1.3 billion syndicated loan to Sri Lanka and a $1.5 billion yuan-denominated swap to drive the country’s reserves.
It is said that Sri Lanka and Beijing are in talks for a $1.5 billion credit line and a fresh syndicated loan of up to $1 billion.
Earlier this month, Colombo stated that talks have commenced on refinancing Chinese debt after Sri Lanka suspended some of the external debt repayments in April.
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