By Devjyot Ghoshal and Uditha Jayasinghe
COLOMBO (Reuters) -Sri Lanka will need about $3 billion in external assistance over the next six months to help restore supplies of essential items including fuel and medicine, Finance Minister Ali Sabry told Reuters on Saturday.
The island nation of 22 million people has been hit by power cuts and shortages which have drawn protesters out on to the streets and put President Gotabaya Rajapaksa under mounting pressure.
"It's a Herculean task," said Sabry in his first interview since taking office this week, referring to finding $3 billion in bridge financing as the country readies for negotiations with the International Monetary Fund (IMF) this month.
The country will look to restructure international sovereign bonds and seek a moratorium on payments, and is confident it can negotiate with bondholders over a $1 billion payment due in July.
"The entire effort is not to go for a hard default," Sabry said. "We understand the consequences of a hard default."
J.P. Morgan analysts estimated this week that Sri Lanka's gross debt servicing would amount to $7 billion this year, with a current account deficit of around $3 billion.
The country has $12.6 billion in outstanding international sovereign bonds, central bank data showed, and foreign reserves of $1.9 billion at the end of March.
"The first priority is to see that we get back to the normal supply channel in terms of fuel, gas, drugs... and thereby electricity so that the people's uprising can be addressed," Sabry said.
The IMF said on Saturday that it had started technical-level engagement with Sri Lanka's finance ministry and central bank officials for a loan programme, and was "very concerned" about the ongoing crisis.
"We commit to assisting Sri Lanka consistent with our policies, and will engage in discussions on a possible program with senior policymakers in the coming days and weeks," Masahiro Nozaki, the IMF's mission chief for Sri Lanka, told Reuters in a statement.
'SENSE OF CONFIDENCE'
Anti-government protests have raged across the island for days, with at least one turning violent in the commercial capital of Colombo, in a threat to the country's lucrative tourism industry.
Thousands of protesters gathered near the president's seafront office in Colombo on Saturday, making it one of the biggest shows of public outrage in recent days.
The protesters included dozens of Muslims who sat in the middle of a blockaded road to break their Ramadan fast and others who urged the president to step down with shouts of "Gota (Gotabaya) go home".