The visiting IMF delegation is expected to conclude talks with the Sri Lankan government and make a formal announcement on Thursday on the much-awaited bailout package and staff-level agreement for the cash-strapped island nation, media reports said on Wednesday.
Sri Lanka is going through its worst economic crisis since its independence in 1948 which was triggered by a severe paucity of foreign exchange reserves.
The second such visit from the International Monetary Fund (IMF) in three months comes at a time when Sri Lanka is scrambling to chalk out a staff-level agreement with the Washington-based global lender for a USD 5 billion programme, which could be the antidote for the country’s current economic travails.
”The IMF Mission in Colombo has been extended by one day because discussions are still ongoing with the authorities, Colombo Page news portal reported, quoting Senior Mission chief Peter Breuer, as saying.
Breuer, who is an expert in debt restructuring, said his team plans to conclude talks with the Sri Lankan government and make a formal announcement on Thursday, the report said.
The IMF delegation was supposed to leave Colombo on Wednesday. The first round of talks ended on August 24, during which the IMF delegation analysed the country’s current economic crisis, the President’s Office said in a statement.
While presenting the budget for the year in Parliament on Tuesday, President Wickremesinghe admitted that the talks with the IMF had reached the ”final stage.”
The IMF has said the objective of the visit is to make progress towards reaching a staff-level agreement on a prospective IMF Extended Fund Facility arrangement in the near term.
”Because Sri Lanka’s public debt is assessed as unsustainable, approval by the IMF Executive Board of the EFF programme would require adequate assurances by Sri Lanka’s creditors that debt sustainability will be restored.
IMF staff would also continue the engagement with other stakeholders during the visit,” the IMF had said in a press release on August 19. Sri Lanka, a country of 22 million plunged into a political crisis last month, after former President Gotabaya Rajapaksa fled the country following a popular public uprising against his government for mismanaging the economy.
Rajapaksa was replaced by his ally Wickremesinghe, who is also the country’s Finance Minister and is leading the talks with the IMF delegation. The country is also expected to restructure its debt worth USD 29 billion, with Japan expected to coordinate with other creditor nations, including China on this issue.
In mid-April, Sri Lanka declared its international debt default due to the forex crisis. The country owes USD 51 billion in foreign debt, of which USD 28 billion must be paid by 2027. Sri Lanka’s inflation level hit a whopping 64.3 per cent for August, continuing to spike as fuel became expensive.
In its latest assessment, the World Bank has said that Sri Lanka has been ranked 5th with the highest food price inflation in the world. Sri Lanka is ranked behind Zimbabwe, Venezuela, and Turkey, while Lebanon leads the list.