By Uditha Jayasinghe

COLOMBO (Reuters) – Sri Lanka seeks to safe round $5 billion in funding this 12 months to cowl repayments for gas imports and different objects purchased by means of credit score strains, and one other $1 billion to bolster its international reserves, the prime minister’s workplace mentioned on Thursday.

The island nation is grappling with its worst monetary disaster in over seven many years with a extreme international trade scarcity that has left it struggling to pay for important imports together with meals, gas, fertilisers and medicines.

Sri Lanka’s international trade reserves stood at $1.81 billion in April.

Prime Minister Ranil Wickremesinghe, who took workplace final month after mass protests compelled the resignation of his predecessor, has raised taxes to shore up authorities revenues and plans to chop expenditure sharply in an interim funds to be offered inside weeks.

Sri Lanka can be negotiating a bailout package deal with the Worldwide Financial Fund, which might doubtlessly allow it to borrow a minimum of $3 billion by way of the lender’s prolonged fund facility.

“He elaborated that discussions with the IMF are continuing and he was hopeful that negotiations would conclude by the tip of the month,” Wickremesinghe’s workplace mentioned in a press release, referring to a dialogue between the prime minister and native chambers of commerce.

Wickremesinghe mentioned that any bridging finance would depend upon Sri Lanka reaching an settlement with the IMF, the assertion added.

Thus far, Sri Lanka has acquired two credit score strains price $1.5 billion from India for gas and important imports. The neighbours are additionally in talks for one more $500 million credit score line to fund gas imports.

Sri Lanka can be asking different international locations for assist, together with Japan, which has long-standing business ties with the island nation. Nonetheless, relations with Tokyo, which has additionally been a key lender to Sri Lanka, cooled after Sri Lanka in 2020 cancelled a $1.5 billion mild railway mission that was to be largely funded by Japan.

“He (Wickremesinghe) added that relations with Japan had damaged down, and it could take some time to restore these relations and regain their confidence,” the assertion from the prime minister’s workplace mentioned.