Sri Lanka President Talk With IMF for Another Bailout Package

Colombo: President Ranil Wickremesinghe and a visiting IMF group on Wednesday examined Sri Lanka’s ongoing monetary emergency as the different sides started crucial discussions to finalize a bailout package and secure a staff-level understanding for the desperate country.

The second such visit from the International Monetary Fund (IMF) in 90 days comes when Sri Lanka is scrambling to chalk out a staff-level concurrence with the Washington-based worldwide bank for a USD 5 billion program, which could be the remedy for the country’s ongoing financial struggles.

Senior Mission chief Peter Breuer, who is a specialist in debt re-structuring, Sri Lanka mission chief Masahiro Nozaki, and Resident Representative Tubagus Feridhanusetyawan met President Wickremesinghe, who is likewise the finance minister and economic stabilization and national policies minister.

“The first round of talks commenced today, during which the IMF delegation analyzed the country’s current economic crisis,” the President’s Office said in a proclamation.

As per authorities, the second round of talks will begin on August 26, during which the designation will hold technical-level discussions with Sri Lanka’s Central Bank Governor Nandalal Weerasinghe.

The Sri Lankan Cabinet on Monday supported a monetary system where 9.9 % of the Gross Domestic Product financial plan shortfall in 2022 will be carried down to 6.9 % by 2023.

Sri Lanka is likewise planning to cut down the primary deficiency, or the deficit without interest costs, a key presentation model in an IMF financial system from a negative 4 % in 2022 to a shortfall of 1% in 2023 in a 3 % of GDP remedy, the EconomyNext paper revealed.

The IMF has said the goal of the visit is to gain ground toward reaching a staff-level settlement on an imminent IMF Extended Fund Facility (EFF) plan in the close to term.

“Since Sri Lanka’s public debt is surveyed as impractical, endorsement by the IMF Executive Board of the EFF program would require satisfactory affirmations by Sri Lanka’s creditors that obligation manageability will be re-established. IMF staff would likewise proceed with the commitment with different partners during the visit,” the IMF had said in a public statement on August 19.

Central Bank governor Weerasinghe said recently that the government had arrived at policy-level targets and was confident of arriving at the staff-level agreement.

On the issue of debt restructuring, which is essential for the IMF facility, Mr. Weerasinghe said, “All creditors will be officially approached and we will present our overall macro program that has been approved by the IMF”.

The Sri Lankan government on Wednesday slapped a restriction on the import of 300 consumer things like chocolates, perfumes, and shampoos as a cash-strapped island country offered to handle its foreign trade difficulties.

“Under imports and exports control regulations dated August 22 an import ban on a wide range of consumer items from food to machinery has come into immediate effect,” the notice said.

In mid-April, Sri Lanka announced its worldwide debt default due to the forex crisis. The nation owes USD 51 billion in foreign debt, of which USD 28 billion should be paid by 2027.

The government’s statistics office said on Monday that the general rate of inflation as estimated by the National Consumer Price Index on a year-on-year premise had gone up to 66.7 % in July over the 58.9 recorded in June.

“This was mainly due to the higher price levels prevailing in both food and non-food groups. The food group increased to 82.5 in July 2022 from 75.8 in June 2022,” the release said.

In its most recent assessment, the World Bank has said that Sri Lanka has been positioned 5th with the most elevated food price inflation in the world. Sri Lanka is positioned behind Zimbabwe, Venezuela, and Turkey, while Lebanon drives the rundown.

The deteriorating forex emergency caused fundamental things deficiencies setting off enormous public protests in the street since early this year that prompted the ouster of the Gotabaya Rajapaksa government last month.