Why IMF aid crisis – hurts Sri Lanka’s last hope

Why IMF aid crisis - hurts Sri Lanka's last hope

Sri Lanka’s economic crisis: Sri Lanka is facing its worst economic crisis since independence.

Colombo:

Crisis-stricken Sri Lankan Prime Minister Ranil Wickremesinghe, who is also the finance minister, said on Thursday that the government was aiming for 5 5 billion in debt repayments and another বিল 1 billion to increase the country’s reserves this year.

He added that ongoing negotiations for a bailout with the International Monetary Fund (IMF) could end later this month.

Sri Lanka, which is going through the worst economic crisis since independence from Britain in 1945, began talks with the IMF on 18 April.

Addressing representatives of the Joint Trade Chambers, Vikramasinghe said on Thursday that debt restructuring had begun after the appointment of financial and legal advisers. This was a prerequisite for an IMF program.

He said ongoing talks with global lenders for a bailout could end later this month.

Vikram Singh said the government is targeting 5 5 billion for debt repayment and another 1 1 billion to increase the country’s reserves this year.

He said Sri Lanka’s need for bridging finance would depend on an agreement with the IMF.

Bikram Singh said talks with donor countries were ongoing and it would take some time for relations with Japan to break down, restore their confidence and recover.

On the issue of drug shortages, he said former Maldivian President Mohammed Nasheed was leading an international appeal for urgently needed medicines.

Indrajith Kumaraswamy, the president’s adviser on economics, told a seminar on Thursday that a worker-level agreement with the IMF could be reached in four to five weeks.

He said the recovery of funds from the IMF would depend on the restructuring of Sri Lanka’s international debt.

The almost bankrupt country, a severe foreign exchange crisis that has defaulted on foreign debt, announced in mid-April that it was suspending about 7 7 billion in foreign debt repayments for this year, up from about 25 25 billion by 2026. Sri Lanka’s total external debt stands at USD 51 billion.

The IMF said last week that it needed “adequate assurances” from the country that it would restore debt stability during the debt restructuring process.

“Since Sri Lanka’s public debt is rated as sustainable, the approval of the executive board of an IMF-backed program for the country requires adequate assurance that debt stability will be restored,” the IMF said.

Bikram Singh said last week that he would quickly prepare an economic reform program and seek approval from the IMF. He met the chairmen and top management of all the state and private banks in the country and asked them about the dollar deficit and the expansion of credit as well as the amount of savings.

The economic crisis has led to severe shortages of essential items such as food, medicine, cooking gas and other fuels, toilet paper and even matches, for months Sri Lankans have been forced to wait in long lines outside shops to buy fuel and cooking gas.

Protesters have been occupying the entrance to President Gotabaya Rajapaksa’s office for nearly 50 days, demanding his resignation.

The president’s brother and former prime minister Mahinda Rajapaksa resigned earlier this month after nationwide violence when his supporters attacked peaceful protesters.

The new prime minister, Vikramasinghe, has vowed to reduce constitutional power, strengthen parliament and propose constitutional changes to address Sri Lanka’s economic woes.

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