The China-backed Asian Infrastructure Investment Bank is considering granting $100 million in emergency support to Sri Lanka, according to the country’s finance ministry.
In a statement, it said Sri Lanka has requested foreign-exchange liquidity support for state banks from the lender.
Finance Minister Ali Sabry said last week the government of President Gotabaya Rajapaksa, the South Asian island’s economy is in crisis, with usable foreign reserves down to $50 million,.
Also Shortages of imported food, fuel and medicines have brought thousands onto the streets in over a month of mostly peaceful protests with. Rajapaksa declaring a second state emergency in five weeks on Friday.
The multilateral AIIB, founded in 2014 to promote infrastructure investing throughout Asia, draws most of its funding from China.
China is Sri Lanka’s largest bilateral lender, with an outstanding balance of $6.5 billion mostly lent over the past decade for large infrastructure projects, including highways, a port, an airport and a coal power plant.
Beijing has extended Sri Lanka a $1.3 billion syndicated loan and a $1.5 billion yuan-denominated swap to boost its reserves. The two countries are in talks for a $1.5 billion credit line and a fresh syndicated loan of up to $1 billion.
Colombo said this month that talks had started on refinancing Chinese debt after Sri Lanka suspended some of external debt repayments in April.
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