Debt-ridden Sri Lanka is seeking new help from the World Bank

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Sri Lanka will apply for additional loans of between US$300 million and US$700 million from the World Bank, the island’s finance minister said on Wednesday.

Ali Sabry told parliament, adding he expects to bring in a new budget after deciding that the current plan was not tenable.

The announcement follows news that Sri Lanka has extended a $200 million credit line with India to raise emergency fuel supplies.

Separately, China said it supports Colombo’s efforts to restructure its debt.

Sri Lanka is also in talks with New Delhi to extend the credit line by an additional $500 million, Energy and Energy Minister Kanchana Wijesekera told a news conference, with four shipments of fuel expected to arrive in May.

The island nation has been hit hard by the pandemic and is short of revenue after President Gotabaya Rajapaksa’s government imposed steep tax cuts. Now he also has a critical shortage of foreign exchange and has turned to the International Monetary Fund (IMF) for an emergency bailout.

Runaway inflation and shortages of imported food, fuel and medicines have sparked weeks of sporadic violent protests.

Sri Lanka has used $400 million of the $500 million line of credit granted by India earlier this year for multiple deliveries in April, Wijesekera said. From the remaining funds, two fuel shipments will be paid for in May.

  • Reuters, with additional editing by George Russell

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George Russel

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and South China Morning Post.

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