Representational image only.
| Photo Credit: AFP

Pakistan has decided to seek a rollover of around $12 billion debt from key allies such as China in the 2024-25 fiscal year to meet a whopping $23 billion worth of gap in its external financing as the federal government aims to achieve budget targets before the expected arrival of an IMF team to the cash-strapped country.

According to the Finance Ministry insiders, $5 billion from Saudi Arabia, $3 billion from the UAE and $4 billion from China will be rolled over, adding that the estimate of further new financing from China would also be included in the next financial year’s budget, The Express Tribune newspaper reported.

Pakistan will receive more than $1 billion from the International Monetary Fund (IMF) under the fresh loan programme, whereas new financing from the World Bank and Asian Development Bank has also been included in the estimated budget.

According to the Finance Ministry sources, new loan programme agreements will be made with financial institutions. The federal government aims to achieve budget targets before the anticipated arrival of the IMF review mission in Pakistan.

Negotiations for a new loan programme with the global lender are expected to commence in mid-May ahead of the budget which will be presented in June. The Finance Ministry sources said the Ministries had been instructed to complete the targets before the negotiations on the new loan programme.

They added that the details would be given to the IMF delegation when all the important targets were met. It has also been decided to have the budget strategy paper approved by the federal Cabinet before the IMF review mission arrives in the country.

According to the sources, the Finance Ministry has started preparing the budget to set the targets for debt repayment, defence budget and tax collections. Besides, the development and ongoing budget targets will also be determined, according to the paper.

Pakistan has been suffering the chronic ailment of how to meet external liabilities. Traditionally, it depended on remittances, export proceeds and foreign loans to meet its liabilities. But exports haven’t increased to match the imports and avenues of foreign aid have gradually dried up, putting pressure on the Rupee and essential imports.

Last year, it narrowly avoided default due to a timely short-term loan agreement with the International Monetary Fund which provided $3 billion during nine months. The country is once again looking towards the global lender to provide a fresh loan to keep it moving.

In the trying economic conditions, Pakistan has been heavily supported by the remittances its workers living and working around the globe send. The country received the second-highest remittances of the ongoing 2023-24 fiscal at $2.8 billion in April 2024.

According to the State Bank of Pakistan (SBP), the remittances increased by 3.5% to $23.8 billion cumulatively in the first 10 months of FY24 compared to the same period last year.

Remittance inflows during April 2024 were primarily sourced from Saudi Arabia ($712 million), the United Arab Emirates ($542.3 million), the United Kingdom ($403.2 million) and the United States of America ($329.2 million), according to the bank.

The remittances earlier had peaked near $3 billion in the prior month of March 2024, marking a 23-month high.

Separately, the Dawn newspaper reported that Pakistan is engaging with the Chinese leadership for the revival of more than 1800-megawatt of hydropower projects (HPPs) and investment from fresh Chinese companies in the country’s transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC).

The authorities are trying to convene a meeting of the Joint Cooperation Committee (JCC) of the Cabinet on May 22-23 so that Prime Minister Shehbaz Sharif’s upcoming visit to Beijing early next month will be a success.

A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network as part of CPEC’s second phase.

In his meeting, Mr. Iqbal sought China’s continued cooperation in the early implementation of the Azad Pattan and Kohala hydropower projects. The two sides agreed to hold the next round of the Joint Working Group meeting on Energy (JEWG) soon.

IMF Managing Director Kristalina Georgieva speaks during a press briefing at the International Monetary and Financial Committee (IMFC) plenary session at the IMF and World Bank’s 2024 annual Spring Meetings in Washington, U.S., April 19, 2024.
| Photo Credit: Reuters

Shareholders of the International Monetary Fund agreed on the importance of addressing challenges faced by low-income countries, many of which are facing unsustainable debt burdens, IMF Managing Director Kristalina Georgieva said on April 19.

Multiple reports from the IMF and the World Bank this week sounded the alarm about economic developments and prospects in low-income developing countries, which are still grappling with the aftermath of the Covid-19 pandemic and other shocks.

The IMF lowered its 2024 growth forecast for low-income countries as a group to 4.7% from an estimate of 4.9% in January. In a separate report, the World Bank said half of the world’s 75 poorest countries were experiencing a widening income gap with the wealthiest economies for the first time this century in a historical reversal of development.

Ms. Georgieva said the IMF was working to reinforce its ability to support low-income countries hit hardest by recent shocks, including through a 50% quota share increase and by adding resources to its Poverty Reduction and Growth Trust.

Ms. Georgieva and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, who chairs the IMF’s steering committee, said internal reforms adopted by the IMF this week should help make the debt restructuring process speedier and smoother.

Also read: Explained | Understanding IMF bailouts

Impact of high debt levels on low-income countries

Ms. Georgieva, in a meeting of the Global Sovereign Debt Roundtable hosted by the IMF and the World Bank this week, said there was progress on setting timelines for debt restructurings and ensuring comparability of treatment for various creditors.

She said high debt levels posed a huge burden for low-income countries, including many in Sub-Saharan Africa, where countries face debt service payments of 12% on average, compared to 5% a decade ago. High interest rates in advanced economies have lured away investments, and raised the cost of borrowing.

“What is heartbreaking is that in some countries debt payments are up to 20% of revenues,” she said, adding that this meant those countries had far fewer resources to invest in education, health, infrastructure and jobs. Affected countries needed to increase their domestic revenues by raising taxes, continuing to fight inflation, paring back spending and developing local capital markets, she said.

The Bulgarian economist said it was vital for these countries to make themselves more attractive to investors, and said the IMF was engaging with countries to help them do that.

U.S. Treasury Undersecretary Jay Shambaugh raised concerns about the situation facing low-income countries last week, warning China and other emerging official creditors against free-riding by curtailing loans to low-income countries just as the IMF or multilateral development banks were pouring funds in. Almost 40 countries saw external public debt outflows in 2022, and the flows likely worsened in 2023, he said.

International Monetary Fund (IMF) logo. Representational image
| Photo Credit: Reuters

The recent remarks of Krishnamurthy Subramanian, Executive Director at the International Monetary Fund, about India’s growth figures does not represent the views of the IMF and were in his role as India’s representative at the global body, the IMF has said.

“The views conveyed… by Mr. Subramanian were in his role as India’s representative at the IMF,” Julie Kozack, IMF spokesperson, told reporters here on Thursday.

She was responding to a question on recent remarks by Mr. Subramanian, in which he projected a growth rate of 8% for India, which is different from the last growth rate projections by the IMF.

Mr. Subramanian, at a event in New Delhi on March 28, had said Indian economy could grow at 8% till 2047, if the country redoubles the good policies that it has implemented over the last 10 years and accelerate reforms.

“So, the basic idea is that with the kind of growth that India has registered in the last 10 years, if we can redouble the good policies that we have implemented over the last 10 years and accelerate the reforms, then India can grow at 8% from here on till 2047,” he had said.

The IMF spokesperson clarified, “We do have an Executive Board. That Executive Board is made up of executive directors who are representatives of countries or groups of countries, and they make up the Executive Board of the IMF. And that’s distinct, of course, from the work of the IMF staff.”

The IMF would be updating its World Economic Outlook in the next couple of weeks. “But our growth projections as of January were for medium term growth of 6.5%, and that was a slight upward revision relative to October. Again, we will be presenting the latest forecast in just a couple of weeks,” Mr. Kozack said.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva
| Photo Credit: REUTERS

The economic success of India is grounded in the pursuit of reforms over the last years, Managing Director of International Monetary Fund (IMF) Kristalina Georgieva said on February 1 exuding confidence that it would achieve its goal of being a developed nation by 2047 by staying the course.

“India has been a bright spot in the world economy, and it continues to be so. We are upgrading projections for Indian growth to 6.5% in 2024. This comes on the back of fairly strong performance in 2023. The success of India is grounded in the pursuit of reforms over the last years,” Ms. Georgieva told a group of reporters here.

Editorial | Poll posture: On the 2024 Interim Budget

Ms. Georgieva said that one very significant advantages of India is the bold actions on the digital front with the digital public infrastructure, digital ID and making digital a strong comparative strength of India allowing small entrepreneurs to tap into markets in the way they were not able to do before.

“We also see in India recognition that female participation in the labour markets is insufficient. I think Prime Minister (Narendra) Modi is right to bet on Indian women and open up more space for their participation in the economy,” she said.

“Last but not least, India recognizes that innovation is what is going to drive a future competitiveness, very effective and efficient investment in R&D as we saw with the moon landing. This creates a very fertile ground for future growth,” the IMF head said.

Also Read | India to emerge as third largest global economy by 2027: Finance Minister

“Where India needs to be watchful like all other countries, it has to be watchful how the strength of public finances and the use of public money support this medium long term objective of strong growth,” she said.

To a question on Prime Minister Modi’s call to make India a developed nation by 2047, when the country celebrates the 100 years of its independence, she said this is very much achievable.

“I see no reason why this will be unachievable. Stay the course,” Ms. Georgieva said hours after the Union Finance Minister in her interim budget said that the Modi’s government is working to make India a ‘Viksit (Developed) Bharat’ by 2047, and that this development would be “all round, all inclusive, and all pervasive”.

Also Read | Finance Ministry says economy likely to grow closer to 7% in 2024-25

The IMF managing director said staying the course also means eliminating obstacles for private entrepreneurship.

“I see in India as actually everywhere space for more to be done,” she said.

“This has been a very visible strength for India: confidence. And confidence not just in the leadership, (but also) confidence of the people. When I was last in India, I talked to people from all walks of life and there is that sense of confidence in the economy; confidence in the country,” Ms. Georgieva said.

Marrakech:

As the lingering effects of the Covid pandemic and the Russia-Ukraine war continue to be felt, it’s been a challenging few years for the global economy, but there are rays of hope as well. In an exclusive interview with NDTV in Marrakech, the International Monetary Fund’s Gita Gopinath spoke about the macroeconomic stability in India, the headwinds in China, artificial intelligence, extreme weather events and how all of these will impact the trajectory of the world economy in the coming years.

Speaking on the sidelines of the 2023 World Bank Group – IMF Annual Meetings, the First Deputy Managing Director of the IMF also spoke about the impact of the conflicts between Israel and Gaza and Russia and Ukraine on oil prices and food security. 

Boundless Potential, Some Concerns

Emphasising that it is early days to assess the true potential of artificial intelligence, Ms Gopinath said the promise of generative AI could raise productivity and help boost slowing global growth. 

“But it is far from certain at this point whether we are going to get all that productivity gain. Obviously, the innovation is important but it is going to require regulation. This is not business as usual, this is a very different animal that we have to deal with in terms of regulation. We have to make sure AI is used so that it actually benefits humanity,” she said. 

Ms Gopinath said governments will need plans and account for the possibility of a lot of workers being affected directly by AI, and some losing their jobs. 

“What we have seen traditionally with technology is this concern that it will cause a lot of layoffs and doesn’t really help create jobs. And what history has taught us is that, on net, a lot more jobs are created. They are in different sectors and demand different skills and so there are people who get affected and lose jobs but that’s where policy plays a role in making sure that they get the right support they need,” she said.

The senior IMF official also said that AI will have an impact on the general pay structure. “It is very interesting, the early studies that are coming up. In the past, as a new entrant to a particular industry, you didn’t have the experience, you had to wait to learn and therefore the pay you got was not as much. With AI you get to use the experience that others had and you get that information really quickly. So we could see somewhat more of a flattening of the pay structure. “

India Third-Largest Economy?

Asked about India’s economic growth and whether the country is on course to becoming the third-largest economy in the world by 2030, Ms Gopinath said, “India has strong growth. At 6.3%, it is one of the largest growth numbers that we have among major economies. We have 6.3% for this year and 6.3% for next year. We did the upgrade because the first quarter data came in somewhat stronger than we had expected.”

“If there is this continuing amount of public investment that happens, that seems to be catalsying private investment and consumption is holding up better than we expected, so I think those are good signs. In terms of the trillion-dollar number that India gets to, I am always a bit cautious because in the last three years we had the pandemic and Russia’s invasion of Ukraine. I wouldn’t want to venture into talking about particular dates,” she added.

Mr Gopinath pointed out that the important thing is that India’s economy is strong, there is macro stability and inflation is coming into the RBI’s target band. “The financial sector is the strongest it has been in a long time. If you combine that with structural reforms, a lot of which is still needed, that could generate a lot of growth in India,” she said.

China Concerns

Ms Gopinath said the IMF had downgraded China’s growth projection slightly, from 5.2% to 5% for this year, and the organisation sees growth slowing down in China in the coming years. She emphasised that the property sector is an important concern and so are its ageing population and weaker productivity growth.

“In terms of spillovers to Asia as a whole, the estimate we have is that when China’s growth goes down by 1 percentage point, it shaves off about 0.3 percentage points out of growth over a five-year period for Asian regions. If I look at India specifically, I don’t see strong direct spillovers. We don’t expect to have a big effect of India slowing down. But if there is a more general slowdown in the global economy that comes from Asia slowing down, of course that would feed into growth for India,” she said. 

World Growth, Food Insecurity

Asked about the reasons behind the global growth outlook for 2023 being 3%, well below the pre-pandemic levels, Ms Gopinath pointed to ageing demographics and weakening productivity. She said China plays an important role in this. 

On food insecurity stemming from the Russia-Ukraine conflict, she said it affects low-income countries the most because they spend a big percentage of their consumption basket on food. She asserted that while food prices have come down, they are still quite high and that remains a concern. 

Ms Gopinath said that among the measures taken by the IMF to address this was the creation of the Food Shock Window to help countries in need. 

Climate And The Future

Ms Gopinath said that while there is an increase in extreme climate-related disasters and the economic cost of that is adding up, the implications for global growth are small for now because the larger economies are doing relatively okay.

“For individual countries, small island nations, this can be very, very big. Even in India, temperatures are going up at twice the rate that it’s happening, on average, in the world. So it is quite vulnerable,” she said.

The IMF official pointed out that India played a big role in pushing for the reforms of Multilateral Development Banks through its G20 leadership and she sees momentum on that front. She also said the inclusion of the African Union into the G20 is very important because most of the working-age population will be on the African continent over the next many years. 

Wang Wenbin. File
| Photo Credit: ANI

Sri Lanka on October 11 welcomed China’s tentative agreement to a debt restructure, as the island nation works to restore its ruined finances after suffering its worst-ever economic crisis.

The government defaulted on its $46 billion debt last year at a time when months of food and fuel shortages were making life a misery for Sri Lanka’s 22 million people.

Beijing is the island’s largest bilateral lender and its consent is needed for any proposal by Colombo to reorganise its finances.

Deputy Finance Minister Ranjith Siyambalapitiya said approval had now been granted by the state-owned Export-Import Bank of China, its official creditor. “China has issued their primary consent to restructure our debt,” he said in a statement.

Chinese Foreign Ministry spokesman Wang Wenbin told reporters on Tuesday that the bank had “tentatively agreed” with Sri Lanka on its debt treatment in late September.

“We are also glad to see that other creditors are having discussions with Sri Lanka as well over solutions to its debt issue,” he added. Neither party shared further details of the agreement.

China holds about 52% of the South Asian nation’s bilateral credit, with Japan and India the next-biggest lenders. Beijing had in March given in-principle agreement to a restructure of its loans to Sri Lanka, the final major creditor to do so.

That decision cleared the way for a staged $2.9 billion International Monetary Fund bailout, conditional on austerity measures such as tax hikes and cuts to generous public subsidies.

But a second tranche of $330 million was delayed last month, with the IMF saying it was still reviewing “financing assurances” from creditors on the detailed debt restructure plan Colombo proposed in June.

Sri Lanka’s central bank governor Nandalal Weerasinghe is this week in Morocco for a meeting with creditor nations and the IMF that does not include China.

“The IMF’s Sri Lanka mission chief Peter Breuer said the lender had “not yet been informed about any specific agreements” with creditors,” Bloomberg reported.

At the peak of last year’s crisis, months of civil unrest forced the ouster of then President Gotabaya Rajapaksa when protesters stormed his residence.

New Delhi:

With the IMF forecasting robust economic growth in India amid concerns about the global economy, Prime Minister Narendra Modi on Tuesday said the country is a global bright spot and powerhouse of growth and innovation.

The International Monetary Fund (IMF) on Tuesday raised India’s GDP projection marginally by 0.2 per cent to 6.3 per cent even as it slashed the global growth forecast to three per cent.

“Powered by the strength and skills of our people, India is a global bright spot, a powerhouse of growth and innovation. We will continue to strengthen our journey towards a prosperous India, further boosting our reforms trajectory,” the prime minister said on ‘X’, citing the IMF figures.

“Growth in India is projected to remain strong, at 6.3 per cent in both 2023 and 2024, with an upward revision of 0.2 percentage point for 2023, reflecting stronger-than-expected consumption during April-June,” the IMF’s ‘World Economic Outlook’ said.

India’s growth is projected to be higher than China’s, the second-largest economy in the world. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The IMF and World Bank last held their meetings in Africa in 1973, when Kenya hosted the event and some nations were still under colonial rule.
| Photo Credit: Reuters

The IMF and World Bank gather in Morocco Monday for their first annual meetings on African soil in 50 years, under pressure to reform to better aid poor nations blighted by debt and climate change.

The International Monetary Fund and World Bank traditionally hold their annual gathering of finance ministers and central bank governors outside their Washington headquarters every three years.

The southern Moroccan city of Marrakesh was supposed to host it in 2021, but the gathering was postponed twice because of the Covid pandemic.

A powerful earthquake that killed nearly 3,000 people in the region south of Marrakesh last month threatened to derail the event again, but the government decided it could go ahead.

The IMF and World Bank last held their meetings in Africa in 1973, when Kenya hosted the event and some nations were still under colonial rule.

Half a century later, the continent faces an array of challenges ranging from conflict to a series of military coups to unrelenting poverty to natural disasters.

“A prosperous world economy in the 21st century requires a prosperous Africa,” IMF Managing Director Kristalina Georgieva said in a speech in Abidjan last week.

In a symbolic move, the IMF and World Bank are poised to give Africa a third seat on their executive boards, which Georgieva said would give the continent a “stronger voice”.

But the thorniest issues revolve around money.

The main contributors are not in favour of a capital increase as it would force them to put up more funds and would give greater influence to emerging powers such as China and India.

The World Bank, however, is expected to confirm plans to boost lending by $50 billion over the next decade through balance sheet changes.

World Bank President Ajay Banga wants to go even further and raise capacity by $100 billion or as much as $125 billion through contributions from advanced economies.

But the issue is unlikely to be finalised in Marrakesh.

The global lenders may use the meetings to reform their quota systems.

The quotas, which are based on a country’s economic performance, determine how much funding they should provide to the IMF, their voting power and the maximum amount of loans they can obtain.

Activists plan to hold a march in Marrakesh to urge the Washington-based institutions to take bold steps against climate change and debt.

NGOs say the austerity-driven solutions offered by the IMF and World Bank are only widening the gap between the rich and the poor in the developing world.

Campaigners say global lenders should focus instead on cancelling the debts of the poorest nations and imposing taxes on the rich.

Oxfam said 57 percent of the world’s poorest countries have to cut public spending by a total of $229 billion over the next five years.

“The World Bank and IMF are returning to Africa for the first time in decades with the same old failed message,” said Oxfam International executive director Amitabh Behar.

“The IMF is forcing poorer countries into a starvation diet of spending cuts, driving up inequality and suffering,” Behar said.

Image used for representational purpose only. File
| Photo Credit: Reuters

Pakistan has rejected a report claiming that it sold arms and ammunition to Ukraine in order to secure a crucial bailout package from the International Monetary Fund (IMF).

Foreign Office Spokesperson Mumtaz Zahra Baloch on September 18 rejected as “baseless and fabricated” the Intercept report saying that cash-strapped Pakistan provided arms to the U.S. to get its support to clinch a $3 billion deal with the IMF towards the end of June to avoid default.

The Intercept, an investigative website, on Sunday reported that “secret Pakistani arms sales to the U.S. helped facilitate a controversial bailout from the IMF earlier this year.

The report said that the arms sales were “made for the purpose of supplying the Ukrainian military — marking Pakistani involvement in a conflict it had faced U.S. pressure to take sides on”.

Pakistan has struggled to maintain a balance in ties with the Kremlin and Washington since the Russia-Ukraine crisis began earlier last year.

“The IMF Standby Arrangement for Pakistan was successfully negotiated between Pakistan and the IMF to implement difficult but essential economic reforms. Giving any other colour to these negotiations is disingenuous,” Dawn News quoted Ms. Baloch as saying.

Ms. Baloch said Pakistan maintained a policy of “strict neutrality” in the dispute between the two countries and did not provide them any arms or ammunition in that context. “Pakistan’s defence exports are always accompanied by strict end-user requirements,” she said.

During a visit to Pakistan in July, Ukra­inian Foreign Minister Dmytro Kuleba had rejected similar reports that the cash-strapped country was supplying arms to Ukraine to support its military during the ongoing conflict with Russia, according to Dawn. He had clarified that the two nations had no deal for the supply of arms and ammunition.

Former Foreign Minister Bilawal Bhutto-Zardari had also expressed similar views, maintaining that Pakistan had not signed any agreement with Ukraine for military supplies since the war began.

In July, the IMF transferred $1.2 billion to cash-strapped Pakistan, part of the $3 billion bailout programme for nine months to support the government’s efforts to stabilise the country’s ailing economy.

H.J.M Seneviratne cuts yellow paddy stems that dried following drought, at his paddy field in Anamaduwa, Sri Lanka.
| Photo Credit: Reuters

H.J.M Seneviratne (63) slices through yellowed paddy stems dried out by a drought that has destroyed more than 95% of his crop and is threatening crisis-hit Sri Lanka’s summer rice harvest.

The island’s economy was crushed last year by its worst financial crisis in more than seven decades, caused by a severe shortage of foreign exchange reserves that triggered widespread unrest and ousted its former President.

Helped by a $2.9 billion bailout from the International Monetary Fund (IMF) Sri Lanka has slowly stabilised its economy since March, rebuilding its decimated reserves, moderating inflation and strengthening its currency.

But even before the country’s agriculture sector could recover from sky-rocketing prices of inputs from fertiliser to power, the rains failed.

“I’ve been a farmer for forty years but I’ve never experienced a harder time than this,” Seneviratne said, standing in the middle of a dusty field near Anamaduwa, a town in north western Sri Lanka, clutching a fistful of straw-like paddy stems with hollow rice kernels. “We haven’t had enough rain since May. The harvest is so bad we don’t even have seed paddy for the next season.”

The southwest monsoon that farmers rely on for the Yala or summer harvest was scanty this year because of the El Nino weather pattern and the weather department estimates there will be no rains until October.

Typically, Seneviratne’s four acres yield about 4.5-6 tonnes of paddy for the summer harvest but this time he predicts he will get only about 150 kg. All but one of the eight water tanks, large ponds in which rainwater is collected for irrigation, in the area have dried out, destroying about 200 acres of paddy.

The paddy loss could be as much as 75,000 acres, according to Agriculture Minister Mahinda Amaraweera while other experts say full losses could be even higher as estimates are yet to be completed. Sri Lanka planted 1.3 million acres for the summer harvest, according to the Agriculture Ministry.

“We have lost at least 80,000 metric tonnes of paddy as per the latest data and it could be more,” said Buddhi Marambe, a professor of crop science at Sri Lanka’s Peradeniya University. Last year, when the crop was decimated by a lack of fertilizer because of the economic crisis, the season produced 1.5 million tonnes of paddy.

The drought could reverse a recent trend of falling food prices, which dipped an annual 2.5% in July after rising 94% year-on-year last September.

Sri Lanka’s central bank warned last week that the dry weather coupled with higher global oil and commodity prices could also “weigh on expected growth in the near term,” as the island struggles to limit economic contraction to 2% this year after shrinking 7.8% in 2022.

Sri Lanka’s northern neighbour India is also expected to have the driest August in more than a century prompting it to restrict exports of certain categories of rice. Sri Lanka has previously imported rice from India to bridge production shortfalls.

Sri Lanka has so far ruled out rice imports this year, a statement from the President’s office said, as regions that have escaped the drought have produced higher yields.

Prices of rice have remained largely unchanged at retail, edging up about 10 Sri Lankan rupees (about 3 U.S. cents) to 220 rupees per kg from last month. So far, rice stocks have staved off any impact but prices could tick up in coming months with a scanty harvest.

Experts say they are worried that if Sri Lanka doesn’t receive the rains it needs next March because of the continuing El Nino, the country will be left with scant reserve stocks and will have to resort to large-scale, expensive imports.

El Nino, a warming of water surface temperatures in the eastern and central Pacific Ocean, is linked to extreme weather conditions from tropical cyclones to heavy rainfall to severe droughts.

During the last El Nino in 2016/17, Sri Lanka suffered its worst drought in 40 years and rice output fell by nearly 50% year-on-year to 2.4 million metric tonnes over both its harvests.

Rice is the staple food of the country’s 22 million people and its biggest crop. According to government data, two million people in the country are rice farmers out of 8.1 million people engaged in fishing and agriculture in the largely rural economy.

To limit the El Nino impact, Buddhi Marambe says farmers will have to plant early during the Maha paddy season that starts in October as rains next March and mid-year are uncertain.

“If rains fail in March it will impact our main paddy season and we could have a very, very dry second season as well in the middle of 2024.”

The drought has also wiped out the small chilli, peanut and banana plants Seneviratne’s wife, W.M. Makamma, 62 grows to feed her family. “Before the crisis we used to cook for all three meals but now it’s only two,” she said. “We’ve stopped buying eggs, chicken or fresh fish. Lunch is a cup of black tea. I feel like we have fallen completely and its very hard to get back up.” ($1 = 323.5000 Sri Lankan rupees)