India has to limit loan assistance due to global crises: SL PM

Colombo: Sri Lankan Prime Minister Ranil Wickremesinghe said that India had to limit the loan assistance given to the crisis-hit island nation in the wake of the recent global crises, including the ongoing Ukraine-Russia war.

"Due to the recent global crises, this situation has become more acute and we, who were in the frying pan, have now fallen into the oven. Due to the Ukraine-Russia war, our problem has worsened. What has happened now is the addition of an international crises on top of our crisis," Wickremesinghe said while addressing Parliament on Monday.

"This situation is not unique to us. This affects other countries as well. India and Indonesia are also affected by this global crisis. Therefore, India has had to limit the loan assistance that they have given to us," he explained.

The premier went on to say that a donor-aid conference would be organised bringing together India, China and Japan, the friendly countries that have helped Sri Lanka in the wake of the worst economic crisis since it gained independence from the British in 1948.

The conference comes as the country is preparing a four-year comprehensive loan assistance programme after getting the approval of IMF Board of directors.

Wickremesinghe warned that unlike previous occasions where Sri Lanka held talks with the IMF as a developing country, now it is "in the negotiations as a bankrupt country".

He said the country's economy is presently shrinking and according to central bank statistics, the current economic growth rate is between negative four and negative five.

"According to IMF statistics, it is between negative six and negative seven. This is a serious situation. If we make a determined journey along this road map, we can achieve an economic growth rate of negative one by the end of 2023," he said.

"By 2025, our aim is to create a surplus in the primary budget. Our effort is to raise the economic growth rate to a stable level. Our expectation is to establish a stable economic base by 2026."

According to the Prime Minister, Sri Lanka has to pay $3.4 billion between June and December this year, $5.8 billion in 2023, $4.9 billion in 2024, $6.2 billion in 2025, $4.0 billion in 2026 and $4.3 billion in 2027.

The total debt burden of the government at the end of 2021 was 17.5 trillion LKR and by March 2022, it increased to 21.6 trillion LKR, he added.