Business & Economy

Sri Lanka says IMF ‘appears positive’ on urgent financial assistance

New Delhi, Apr 19 (EFE).- Sri Lanka Tuesday said negotiations for urgent financial assistance from the International Monetary Fund (IMF) began on a “positive note” in the United States capital.

The cash-strapped island nation is facing the worst economic crisis in decades that have sparked massive protests and a growing clamor for the government of President Gotabaya Rajapaksa, forcing it to seek rapid financial assistance from a reluctant global lender.

A delegation led by Finance Minister Ali Sabry began talks with the IMF in Washington early for an urgent loan to help the crisis-ridden country pay for imports of food, medicines, and fuel.

“Negotiations with the IMF started on a positive note today,” Sabry’s aide Shamir Zavahir said on Twitter.

Zavahir said the finance minister “made a request for a Rapid Financing Instrument (RFI) to mitigate the current supply chain issues, yet initially IMF of the view that it doesn’t meet their criteria.”

“However, India subsequently made representations on an RFI for as well and the IMF may consider this request due to the unique circumstances,” he said, referring to an Indian delegation led by Finance Minister Nirmala Sitharaman who is also in Washington.

Sri Lanka is seeking $4 billion from the IMF.

“In any event, the IMF appears to be positive towards granting an Extended Fund Facility (EFF). Ideally if this can be expedited, it can help stabilize things in the short term till long-term solutions kick in,” Zavahir said.

The negotiations began a week after the government announced the sovereign default on its external debt.

The island nation temporarily suspended foreign debt payments last Tuesday since it could not pay any of the $51 billion worth of foreign debts as it has run out of foreign currencies.

According to the finance ministry data, the debt amounted to $20 billion until the 2021 end.

The island nation is facing an unprecedented economic crisis caused, in part, by the country’s heavy debt, the economic downturn during the pandemic, and a drastic drop in tourism activity.

The crisis has caused shortages of essentials like fuel, food, and medicines.

Thousands of people have taken to the streets in the country of 22 million, alleging that the government failed to address the crisis.

The protesters, mainly concentrated near the presidential house in Colombo, have demanded President Gotabaya step down. EFE


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