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US announces additional $5.75 million in response to Sri Lanka's economic crisis

The United States pledged extra support of over $5 million to cash-strapped Sri Lanka on Tuesday to meet the immediate needs of those most affected by the island's economic crisis.

June 21, 2022 / 03:16 PM IST
A man waits in line to buy domestic gas tanks near a distributor, amid the country's economic crisis, in Colombo, Sri Lanka, May 23. (Image: Reuters)

A man waits in line to buy domestic gas tanks near a distributor, amid the country's economic crisis, in Colombo, Sri Lanka, May 23. (Image: Reuters)

The US on Tuesday announced additional funding of over USD 5 million to cash-starved Sri Lanka to address the immediate needs of people hardest hit by the economic crisis in the island nation. This new grant funding through the US Agency for International Development (USAID) builds on last week’s announcement of USD 6 million in grants through USAID and USD 120 million in new loans through the Development Finance Corporation (DFC) to meet the needs of Sri Lankans during the economic crisis.

Sri Lanka is going through the worst economic crisis since its independence from Britain in 1948. The US government announced the third tranche of new funding on Tuesday to address the immediate needs of people hardest hit by the economic crisis in Sri Lanka.

This humanitarian assistance, totalling USD 5.75 million, will provide cash assistance, short-term jobs, and agriculture supplies such as seeds directly to crisis-affected people to meet their basic needs, the US embassy in Sri Lanka said in a statement. The recent United Nations appeal to international donors warned of an unfolding multi-dimensional food security crisis in Sri Lanka, explained US Ambassador to Sri Lanka Julie Chung.

The new assistance that we’re announcing today will address some of those complex issues. We are working hard to ensure that these funds directly reach the Sri Lankans who have been most severely affected by this crisis. The funding announced will also support microenterprises in communities that traditionally experience high poverty rates and are especially impacted by the crisis. In addition, it will provide for community-based disaster management committees to help prepare for, respond to, and ultimately recover from crises, the statement said.

Over the coming months, the United States plans to add to its significant ongoing investments and assistance projects in Sri Lanka that help the people of Sri Lanka meet their immediate and long-term needs. These efforts build on six decades and over USD 2 billion of foreign assistance from the American people that have strengthened tourism, small businesses, renewable energy, climate adaptation, and civil society in Sri Lanka.

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Sri Lanka is in talks with the International Monetary Fund (IMF) for an economic programme that could be supported by the global lender’s lending arrangement for the country which is seeking to find USD 6 billion to keep it afloat for the next six months. The IMF, however, has placed a number of conditions in order to agree to a bailout package.

The nearly bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026. Sri Lanka’s total foreign debt stands at USD 51 billion. The economic crisis has prompted an acute shortage of essential items like food, medicine, cooking gas and other fuel, toilet paper and even matches, with Sri Lankans for months being forced to wait in lines lasting hours outside stores to buy fuel and cooking gas.
PTI
first published: Jun 21, 2022 03:05 pm
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