IMF plans to send in-person mission to crisis-hit Sri Lanka: spokesperson
The IMF is planning an in-person mission in the coming weeks to Sri Lanka, which is facing a very difficult economic situation, for discussions on a financial arrangement, its spokesman said, but stressed that the country must take steps. measures to restore debt sustainability before the global lender can propose a financing program.
International Monetary Fund spokesman Gerry Rice said the global financial body was committed to supporting Sri Lanka at this difficult time, in line with IMF policies.
“It is clear that Sri Lanka is facing a very difficult economic situation and serious balance of payments problems. We are deeply concerned about the impact of the ongoing crisis, especially the humanitarian concern, meaning the impact on people,” IMF spokesman Gerry Rice said during a briefing. a press briefing on Thursday.
His statement came a day after Sri Lankan Prime Minister Ranil Wickremesinghe said he had urged IMF chief Kristalina Georgieva to “speed up” its aid package to the country.
Rice said the IMF was closely monitoring the situation in Sri Lanka and was planning an in-person mission to Colombo in the coming weeks to engage in political discussions on the program, building on the technical discussions that have already taken place. took place in May.
Sri Lanka has decided to seek help from the Washington-based global lender to tackle the worst economic crisis since its independence from Britain in 1948. Talks between Sri Lanka and the IMF began on April 18.
Sri Lanka has already taken steps to restructure its external debt – a precondition for an IMF program – after the government suspended all external debt repayments on April 12.
Rice said the timing of a personnel-level deal will depend in part on the strength of the policies the authorities propose and commit to.
The spokesman stressed that since Sri Lanka’s debt has been assessed as unsustainable, board approval of any program would require adequate assurances that the authorities would take steps to restore debt sustainability before a financial arrangement can be envisaged.
He pointed out that a staff-level agreement would be submitted to the IMF board for approval to make the final decision.
The IMF spokesperson said Managing Director Georgieva spoke with Sri Lankan Prime Minister Ranil Wickremesinghe on Tuesday and they discussed at length the IMF’s engagement with Sri Lanka.
“We are engaging as much as we can to see how we can help, but again too early for us to discuss the scale of potential funding or a specific date for the staff level agreement or when it will. could go to the board,” he said.
He reiterated that when the IMF determines that the country’s debt is not sustainable, the country must take steps to restore debt sustainability before the IMF can move forward with the financing program.
Last Thursday, Wickremesinghe said the government was targeting $5 billion this year for repayments, plus another $1 billion to bolster the country’s reserves.
He said Sri Lanka’s bridge financing needs would depend on reaching an agreement with the IMF.
Addressing parliament on Tuesday, Wickremesinghe said Sri Lanka will need $5 billion to ensure people’s daily lives are not disrupted for the next six months.
The near-bankrupt country, with an acute foreign exchange crisis that led to a foreign debt default, announced in April that it was suspending repayment of nearly $7 billion in foreign debt owed for this year on about $25 billion due until 2026. Sri Lanka’s total external debt is at $51 billion.
The IMF said in May that it required sufficient assurance from the country that it will restore debt sustainability during the debt restructuring process.
The economic crisis has led to severe shortages of essentials like food, medicine, cooking gas and other fuels, toilet paper and even matches, with Sri Lankans forced to queue for months for hours in front of stores to buy fuel and cooking gas.