Sri Lanka: IMF guarantees to support government efforts to overcome economic crisis

The International Monetary Fund has secured support for the debt-ridden Sri Lanka in its efforts to alleviate the current economic crisis and described the initial discussions with the delegation led by the country’s finance minister Ali Sabry as “fruitful”. Sri Lanka has been struggling with unprecedented economic turmoil since its independence from Britain in 1948.

The crisis is due, among other things, to a shortage of foreign currency, which has meant that the country cannot afford to pay for imports of basic food and fuel, which has led to an acute shortage and very high prices.

Sabry and his delegation, which included central bank governor Nandalal Weerasinghe, are currently in Washington, where they held technical discussions on an IMF-backed program.

“The Sri Lankan delegation and the IMF team had fruitful technical discussions on the authorities’ request for an IMF-supported program. The discussions covered recent economic and financial developments in Sri Lanka and the need to implement a credible and coherent strategy to restore macroeconomic stability.” said the IMF in a statement on Saturday.

Sri Lanka needs at least $ 4 billion to cope with its growing economic problems, and Sabry has been negotiating with the World Bank and countries such as China and Japan on financial assistance.

“In the future, the IMF team will support Sri Lanka’s efforts to overcome the current economic crisis by working closely with the authorities on their economic program and by engaging with all other stakeholders in support of a timely resolution of the crisis,” it said. the declaration. .

The Washington-based international lender also welcomed the Sri Lankan government’s plans to negotiate with creditors.

On April 12, Sri Lanka suspended its debt service for the first time in its history.

“The IMF team welcomed the authorities’ plan to enter into a cooperative dialogue with their creditors,” it added.

On Saturday, India has agreed to extend an additional $ 500 million credit line to help Sri Lanka import fuel.

India has already agreed to defer $ 1.5 billion in import payments to be paid by Sri Lanka to the Asian clearing union.

On Friday, New Delhi also extended the term of office for a $ 400 million swap given in January this year, the Indian High Commission said.

On Saturday, Sri Lankan President Gotabaya Rajapaksa said the country in crisis welcomed investment, technology transfers and financing for its sustainability efforts and debt restructuring cooperation to support the economic recovery in this critical time.

Last week, the Sri Lankan government said it would temporarily default on $ 35.5 billion in foreign debt as the pandemic and war in Ukraine made it impossible to make payments to overseas creditors.

Sri Lanka has witnessed massive anti-government protests in recent weeks as it suffers from food shortages, sky-high fuel prices and major power outages due to the unprecedented financial crisis.

Read also: Sri Lankan Prime Minister Mahinda Rajapaksa rejects calls for interim government

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