IMF team in Sri Lanka to discuss bailout plan for the crisis-hit island
Sri Lankan Prime Minister Ranil Wickremesinghe on Monday held talks with a visiting IMF team on an economic programme that could be supported by the global lender’s lending arrangement for the cash-starved government which is seeking to find USD 6 billion to keep the country afloat for the next six months. In June first week, Wickremesinghe, who is also the Finance Minister, held talks virtually with the Managing Director of the International Monetary Fund Kristalina Georgieva as Sri Lanka has decided to seek the assistance of the Washington-based global lender to combat the worst economic crisis since its independence from Britain in 1948.
The Prime Minister’s Office said the IMF team is in Sri Lanka to continue in-person discussions with the Sri Lankan authorities to reach a staff-level agreement. The future course of the action on borrowing will depend on the conclusion of agreements between Sri Lanka and the IMF staff level, and the delegation will stay in Sri Lanka for about a week to hold discussions, the Prime Minister’s Office said. Talks with IMF started in April.
The IMF team is visiting Colombo during June 20-30 to continue discussions on an economic programme that could be supported by an IMF lending arrangement, building on the progress made during the May 9-24 virtual mission, the Colombo Gazette news portal reported. “We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies,” the IMF said.
Sri Lanka expects USD 4-6 billion in loan assistance from the IMF. Earlier, Prime Minister Wickremesinghe had stated that the loan assistance from this fund would enable Sri Lanka to obtain assistance from other countries. The IMF has placed a number of conditions in order to agree to a bailout package. Sri Lanka has already initiated measures to restructure its foreign debts — a prerequisite for an IMF programme — after the government suspended all the external debt repayments on April 12.
Wickremesinghe has earlier said that the government was targeting USD 5 billion this year for repayments, plus a further USD 1 billion to bolster the country’s reserves. 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.
[with PTI inputs]
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