Sri Lanka hopes to reach initial agreement with IMF for help

Colombo, Sri Lanka –

Sri Lanka’s central bank chief said on Thursday he hoped the crisis-ridden island nation could reach a preliminary agreement that could lead to a bailout with the International Monetary Fund as officials from the This financial institution is visiting Sri Lanka later this month.

The Indian Ocean nation is facing its worst economic crisis and has been negotiating with the IMF while government leaders in Colombo say Sri Lanka is bankrupt.

Nandalal Weerasinghe, governor of Sri Lanka’s central bank, said he hoped that IMF and Sri Lankan government officials could “finalize and reach a staff-level agreement” on the policy package during their meetings. surname.

In April, Sri Lanka announced that it would stop paying foreign loans. The country’s total external debt is $51 billion, of which $28 billion is due by 2027. The country says it needs to restructure all of its debt.

Weerasinghe told reporters on Thursday that the deal being sought with the IMF would give them “a clear picture of debt sustainability and debt targets for us to achieve over the next 10 years.”

Weerasinghe said that once an agreement is reached, Sri Lanka will reach out to sovereign bondholders and other external creditors.

“We hope all of our creditors will support Sri Lanka as they see the robust macro program adopted by the IMF,” he said.

Sri Lanka’s economic downturn has triggered a political crisis, with anti-government protests spreading across the country. Massive public protests toppled Sri Lankan President Gotabaya Rajapaksa last month.

Rajapaksa fled the country after thousands of protesters stormed his official residence and resigned into exile. He first fled to the Maldives, then to Singapore and is currently in Thailand.

Protesters blame Rajapakasa and his powerful family for years of mismanagement and corruption for bankrupting the nation and leading to unprecedented shortages of essential imports. as fuel, medicine and gas.

Two weeks ago, new Sri Lankan President Ranil Wickremesinghe said his government had begun negotiations with the IMF on a four-year rescue plan and had begun finalizing a debt restructuring plan.

However, Wickremesinghe also said that negotiations with the IMF were fraught with difficulties due to Sri Lanka’s bankruptcy and the expected early August target for an agreement with the agency had not been achieved. It is now expected to be in September because of the social unrest in the country.

Wickremesinghe was elected president last month to complete the remainder of Rajapaksa’s five-year term, which ends in 2024.

Wickremesinghe’s government is preparing a national policy roadmap over the next 25 years that aims to cut public debt and transform the country into a competitive export economy.

Wickremesinghe stressed that Sri Lanka needs long-term solutions and a solid foundation to prevent the recurrence of economic crises.

Two weeks ago, he said difficulties had eased somewhat with electricity cuts, fertilizer introduction to crops and improved gas distribution.

But many complain that the price increase of most essential items is intolerable.

Prices of most essential items have tripled in recent months and most people are struggling to pay for basic needs. About 70% of Sri Lankan households surveyed by UNICEF in May said they had cut back on food consumption. Many families rely on government distribution of rice and charitable donations.

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