Conflicts & War

Sri Lanka resumes bailout negotiations with IMF

Colombo, Aug 24 (EFE).- A delegation of the International Monetary Fund on Wednesday resumed dialog with Sri Lankan authorities to finalize a bailout package and offer some respite from the severe economic crisis affecting the island nation.

“The IMF team is in the country and has already initiated discussions with the Central Bank,” a spokesperson of the Central Bank of Sri Lanka (CBSL) told EFE on the condition of anonymity.

The delegation is set to remain in Sri Lanka until Aug. 31 and would try to reach “a staff-level agreement on a prospective IMF Extended Fund Facility (EFF) arrangement in the near term,” the Fund said in a press release ahead of the visit.

During their stay, the IMF representatives are set to meet local officials to discuss the reforms and economic and financial policies that the island would be required to adopt in order to access the bailout and for restructuring its debt, which has been classified as “unsustainable” by the international body.

Sri Lanka had approached the IMF to secure a bailout package while facing the worst economic crisis in its history, partly owing to a foreign currency shortage and the resultant severe shortfall of fuel and basic necessities.

The island nation, whose foreign reserves have dropped to an all-time low of around $1.8 billion, hopes to secure some $4 billion from the IMF that will allow it to restore fiscal balance.

CBSL Governor Nandalal Weerasinghe said last week that the negotiations were progressing well and they expected a preliminary agreement with the international financial agency by the end of August, after which they would get in touch with all the bilateral and commercial creditors.

An IMF delegation had visited the island two months ago for a round of negotiations with the Sri Lankan government.

Although the authorities hoped for a positive outcome from the meetings held in mid-June, civil unrest plunged the country into chaos and led to the resignation of former President Gotabaya Rajapaksa in mid-July, putting the agreement on hold.

The administration of the current president Ranil Wickremesinghe, elected on July 20 by parliament, resumed the talks with IMF on Jun. 29 for a loan that would help it purchase essential goods end fuel. EFE


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