Sri Lankan finance minister Ali Sabry and his delegates, including Central Bank Governor, Nandalal Weerasinghe, are in Washington holding negotiations with the International Monetary Fund (IMF) for financial assistance. Sri Lanka is also said to be in talks with China and Japan.
IMF, in a statement, said, “The Sri Lankan delegation and the IMF team had fruitful technical discussions on the authorities’ request for an IMF-supported program. The discussions covered recent economic and financial developments in Sri Lanka and the need for implementing a credible and coherent strategy to restore macroeconomic stability.”
“Going forward, the IMF team will support Sri Lanka’s effort to overcome the current economic crisis by working closely with the authorities on their economic program and by engaging with all the stakeholders in support of a timely resolution of the crisis,” the statement added.
Earlier the Sri Lankan government decided to temporarily default on its entire foreign debt of $35.5 billion to ensure it had enough money to procure food supplies for the economically battered nation. Sri Lanka will need an immediate assistance of $4 billion.
India talks to IMF
Meanwhile, last week, Indian Finance Minister Nirmala Sitharaman recommended that the International Monetary Fund (IMF) and the World Bank (WB) temporarily categorize Sri Lanka as a low-income country to help restructure its debt.
Sitharaman held discussions with WB president David Malpass, IMF Managing Director Kristalina Georgieva, and the board of governors to put forward Sri Lanka’s case.
She underlined that although Sri Lanka was a middle-income country before the pandemic, its national revenues dipped due to its dependence on the tourism sector, which was hurt badly by pandemic lockdowns and travel curbs.
The FM has also argued that Sri Lanka could be offered immediate assistance through the Rapid Financing Instrument (RFI), which extended emergency aid to Ukraine. In addition, and furthering its support to Sri Lanka, India offered an additional $500 million credit line to purchase fuel.