Crisis-hit Sri Lanka seeks to secure around $5 billion for import payments

Sri Lanka seeks to secure around $5 billion in funding this year to cover repayments for fuel imports and other items bought through credit lines, and another $1 billion to bolster its foreign reserves, the prime minister's office said on Thursday.

The island nation is grappling with its worst financial crisis in over seven decades with a severe foreign exchange shortage that has left it struggling to pay for essential imports including food, fuel, fertilisers and medicines.

Sri Lanka's foreign exchange reserves stood at $1.81 billion in April.

PM Ranil Wickremesinghe, who took office last month after mass protests forced the resignation of his predecessor, has raised taxes to shore up government revenues and plans to cut expenditure sharply in an interim budget to be presented within weeks.

Sri Lanka is also negotiating a bailout package with the International Monetary Fund, which could potentially enable it to borrow at least $3 billion via the lender's extended fund facility.

“He elaborated that discussions with the IMF are proceeding and he was hopeful that negotiations would conclude by the end of the month,” Wickremesinghe's office said in a statement, referring to a discussion between the prime minister and local chambers of commerce.

Wickremesinghe said that any bridging finance would depend on Sri Lanka reaching an agreement with the IMF, the statement added.

So far, Sri Lanka has received two credit lines worth $1.5 billion from India for fuel and essential imports.