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Sri Lankan PM Wickremesinghe hold talks with IMF team on economic programme

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

International Monetary Fund | sri lanka | Ranil Wickremesinghe

Press Trust of India  |  Colombo 

Ranil Wickremesinghe, Sri Lanka PM
Ranil Wickremesinghe, Sri Lanka PM

Sri Lankan Prime Minister 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.

Earlier this month, Wickremesinghe, who is also the finance minister, held talks virtually with the Managing Director of the Monetary Fund Kristalina Georgieva as 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 talks between and the IMF commenced on April 18.

The Prime Minister's Office said the IMF team is in 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.

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 4-5 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.

In May, the IMF 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.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mon, June 20 2022. 14:06 IST