Colombo, Jul 15 (EFE).- The International Monetary Fund (IMF) announced on Friday its intention to resume negotiations with Sri Lanka for an urgent economic bailout, once the institutional crisis in the country is resolved.
“We hope for a resolution of the current situation that would allow for our resumption of a dialogue on an IMF supported program,” IMF spokesperson Gerry Rice said at a press briefing.
Sri Lanka is facing its worst economic crisis since independence from the British Empire in 1948, and is currently negotiating with the IMF for a bailout that will restore its financial stability.
However, the absence of a government following the resignation of President Gotabaya Rajapaksa and the appointment Prime Minister Ranil Wickremesinghe as the acting president till a new one is appointed, impedes the progress in talks with the IMF.
Following the IMF’s last official visit to the island around June-end, Wickremesinghe had announced that he hoped to formalize a bailout package by late July.
However, the turn of events that have led to a greater crisis in the country’s political institutions makes it impossible to meet those expectations.
The Sri Lankan authorities see this financial assistance from the IMF as the only way to emerge from the economic crisis plaguing them.
IMF has called on Sri Lanka to carry out urgent fiscal reforms to qualify for a bailout program, and noted high inflation and balance-of-payments pressures as two of the main challenges in tackling the crisis.
Sri Lanka has been suffering for months from shortages of medicines, food and fuel, caused in part by heavy indebtedness, misguided government policies, and the impact of the pandemic on tourism.
With international reserves at record lows and the decision to suspend payments on its foreign debt in April, Sri Lanka approached the IMF in search of a credit line to restore fiscal stability. while trying to reach agreements for debt restructuring.
However, the political turmoil in the island, with thousands of citizens demanding Rajapaksa’s resignation since March for his mismanagement of the economy, made it difficult from the outset to make progress in the negotiations. EFE