Colombo: Sri Lankan Prime Minister Ranil Wickremesinghe has urged IMF chief Kristalina Georgieva to send a team to Colombo “as soon as possible” so that a staff-level agreement could be finalised as his cash-starved government is seeking to find USD 6 billion to keep the country afloat for the next six months.
The conversation between Wickremesinghe, who is also the finance minister, and the Managing Director of the International Monetary Fund comes 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 1945. The talks between Sri Lanka and the IMF commenced on April 18.
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.
During his talks with the IMF Managing Director on Tuesday, Wickremesinghe “requested that the staff-level delegation from the IMF visit Sri Lanka as soon as possible so that the staff-level agreement could be finalised,” online portal newsfirst.lk reported on Wednesday, quoting a statement issued by the Prime Minister’s Media Division.
The prime minister explained that negotiations regarding bridging finance were reliant on Sri Lanka and the IMF concluding a staff-level agreement, it said.
Georgieva expressed her willingness to support Sri Lanka in these difficult times, the statement said.
On Thursday last, Wickremesinghe had said the government was targeting USD 5 billion this year for repayments, plus a further USD 1 billion to bolster the country’s reserves.
He said Sri Lanka’s bridging finance requirements would depend on an agreement with the IMF being reached.
Addressing Parliament on Tuesday, Wickremesinghe said Sri Lanka will need USD 5 billion to ensure that the people’s daily lives are not disrupted for the next six months.
“We need to strengthen the rupee in line with the daily requirements of the citizens. Another USD 1 billion is needed to strengthen the rupee. That means we need to find USD 6 billion to keep the country afloat for the next six months,” he told the lawmakers.
While addressing the representatives from the Joint Trade Chambers earlier this week, the prime minister had said that debt restructuring had begun, following the appointment of financial and legal advisors. He said that the ongoing negotiations with the global lender for a bailout could be concluded by the end of this month.
According to Economy Next news portal, Wickremesinghe’s discussion with Georgieva came hours after he called on the IMF to hold a conference to help unite Sri Lanka’s lending partners.
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 IMF in May said that it requires “sufficient assurance” from the country that it will restore debt sustainability during the debt restructuring process.
“Since Sri Lanka’s public debt is assessed as unsustainable, approval by the Executive Board of an IMF-supported programme for the country would require adequate assurances that debt sustainability will be restored, the IMF had said.
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.
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