© Reuters FILE PHOTO: Asian Development Bank President Masasasugu Asakawa speaks at the Sydney Energy Forum in Sydney, Australia, July 12, 2022. Brooke Mitchell/Pool via REUTERS
By Karen Lemma and Tetsushi Kajimoto
MANILA/TOKYO (Reuters) – The Asian Development Bank (ADB) is ready to provide additional financing to Sri Lanka, the region’s top lender said, as the Indian Ocean nation struggles through its worst economic crisis in more than seven years. Decades.
This comment provoked protests that forced the president after ADB agreed to provide a $200 million emergency loan to ensure food supplies for months and protect livelihoods.
“As a key long-term partner, ADB stands ready to provide additional support,” Bank President Masasasugu Asakawa told reporters at the annual meeting.
Sri Lanka’s economy is stagnant and suffering from high inflation, Asakawa said. The annual figure exceeded 70% in August.
“Therefore, we are working closely with the government to support the country at this challenging time,” he added.
Asakawa said Colombo is working to finalize a staff-level agreement with the International Monetary Fund (IMF) on a nearly $2.9 billion loan, seeking financial guarantees from creditors and other steps.
“After the completion of the IMF program, we plan to join another one, providing Sri Lanka with additional financial resources to join other rescue packages,” said Asakawa, a former Japanese vice finance minister for international affairs.
As the U.S. central bank tightens monetary policy, Osaka pointed to the risk of sudden capital outflows from Asia and the prospect of a sharper exchange rate devaluation.
However, Asia has been more resilient to financial turmoil than during the Asian financial crisis of the late 1990s, thanks to improved balance sheets and adequate foreign reserves.
However, portfolio capital movements are very fast and dynamic, Asakawa said.
“It’s always a good thing to be proactive in this broad movement of capital,” he added.
“I’m trying to increase our regional financial cooperation efforts, including the ASEAN+3,” he said, referring to China, Japan and South Korea, a group of Southeast Asian nations.