Sri Lanka will need about $3 billion in external assistance over the next six months to restore supplies of essential necessities, including fuel and medicines, to deal with a severe economic crisis, its finance minister told Reuters on Saturday.
The island nation of 22 million has been plagued by ongoing power outages, with medicines, fuel and other supplies running out, angry protesters taking to the streets and increasing pressure on President Gotabaya Rajapaksa.
“It’s a Herculean task,” Finance Minister Ali Sabry said in his first interview since taking office this week, referring to the search for $3 billion in bridge funding as the country enters negotiations with the International this month Monetary Fund (IMF) prepared.
The South Asian island nation will look to restructure international government bonds and seek a moratorium on payments, and is confident of negotiating with bondholders for an upcoming $1 billion payment in July.
“The whole effort isn’t going for a hard default,” said Mr. Sabry. “We understand the consequences of a hard failure.”
Analysts at JP Morgan this week estimated Sri Lanka’s gross debt service this year would be $7 billion with a current account deficit of around $3 billion.
The country has outstanding international government bonds of $12.55 billion and foreign exchange reserves of $1.93 billion at the end of March, according to the central bank.
“The first priority is to make sure we get back to the normal supply channel in terms of fuel, gas, drugs… and therefore electricity, so that the popular uprising can be addressed,” Mr Sabry said.
