Sri Lankan Prime Minister Ranil Wickremesinghe on Tuesday said the country needed $5 billion over the next six months to ensure basic living standards.

Mr Wickremesinghe said the country was renegotiating the terms of a yuan-denominated swap worth $1.5 billion with China so as to fund essential imports.

The prime minister told parliament that to tide over the country’s economic crisis, Sri Lanka would need about $3.3 billion for fuel imports, $900 million for food, $250 million for cooking gas and $600 million more for fertiliser this year.

Mr Wickremesinghe said the central bank had estimated the economy would contract by 3.5 per cent in 2022, but added that he was confident growth could return with a strong reform package, debt restructuring and international support.

The prime minister, working on an interim budget to balance battered public finances, said establishing economic stability would be not enough.

“We have to restructure the entire economy. We need to achieve economic stability by the end of 2023,” he added.

The Indian Ocean nation of 22 million was negotiating a loan package worth about $3 billion from the International Monetary Fund, in addition, to help from countries such as China, India and Japan.

On Tuesday, the cabinet approved a $55 million credit line from India’s Exim Bank to fund 150,000 tonnes of urea imports, a critical requirement as supplies have run out during the current cropping season.

According to the prime minister, the United Nations was set to make a worldwide public appeal for Sri Lanka on Wednesday and has pledged $48 million for food, agriculture and health.

Sri Lanka was also renegotiating with China the terms of a yuan-denominated swap worth $1.5 billion agreed in 2021.

The initial terms provided that the swap could only be used if Sri Lanka maintained reserves equivalent to three months of imports.

However, with reserves now well below that level, Sri Lanka had to request China to reconsider the requirement and allow the swap to proceed, Wickremesinghe said.

The island nation’s worst economic crisis in seven decades led to a shortage of foreign exchange that stalled imports of essential items such as fuel, medicine and fertiliser, provoking devaluation, street protests and a change of government.

(Reuters/NAN)