Sri Lanka to start talks with IMF on debt restructuring
Mar 13, 2022
Colombo [Sri Lanka], March 13 : Sri Lanka is set to begin talks with the International Monetary Fund (IMF) in mid-April on a plan for aid for the crisis-ridden country, media reports said on Sunday.
The talks are likely to include assistance with debt restructuring and managing its foreign exchange shortage.
Media reports said that Sri Lankan Finance Minister Basil Rajapaksa will travel to the US next month to present Sri Lanka's proposal to IMF officials.
The Daily Mirror reported that the island nation must repay about USD 4 billion in foreign debt this year.
The decision to engage with the international lender comes following months of resistance from the government despite calls from Opposition leaders and experts for a recovery plan.
This comes as Sri Lanka's forex reserves have depleted to 2.3 billion US dollars by February 2022, according to the English-language newspaper The Island.
W A Wijewardena, former Deputy Governor of the Central Bank, said an overall coordinated program is needed though the float was a step in the right direction.
"A piecemeal attack will not help," Wijewardena said. "We need a macro-economic plan that will cover the interest rates, exchange rate, monetary policy and the budget," he added.
Amid the worsening economic situation in the country, India has continued to assist Sri Lanka in its fight against the Covid-19 pandemic, and to mitigate its adverse impact and its developmental priorities.
India provided more than USD 500 million in foreign currency swaps to strengthen Sri Lanka's foreign reserves, taking the total up to USD 900 million. India also extended the repayment time frame for the USD 500 million debt of Sri Lanka under the Asian Clearance Arbitration.
