IMF to visit Sri Lanka on Wednesday to assess debt

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IMF to visit Sri Lanka on Wednesday to assess debt

Written by
Priyali Dhingra

August 21, 2022, 9:26 p.m.
3 minute read

The IMF will visit Colombo from August 24 to 31 to continue discussions on economic and financial reforms and policies.

A team from the International Monetary Fund (IMF) will visit Sri Lanka this week to assess the island nation’s total foreign and domestic debt.

The team will resume aid talks with a bankrupt Colombo, days after they were halted by civil protests.

The island nation, in April this year, defaulted on $51 billion in foreign debt.

Sri Lanka is experiencing record inflation and a shortage of food and fuel due to a long-term financial crisis that has left the country bankrupt.

The country’s economy has been hit by the COVID-19 pandemic and the Russia-Ukraine crisis, leaving it with $51 billion in foreign debt.

After massive civil protests, former President Gotabaya Rajapaksa resigned and Ranil Wickremesinghe was chosen as the new leader.

The IMF will resume discussions for monetary aid

In a statement released earlier this week, the IMF said it would visit Colombo from August 24-31 to continue discussions on economic and financial reforms and policies.

The crisis-based lender hopes to make progress on a future IMF Extended Financing Facility (EFF) arrangement in the near future.

Official talks on a new package for the cash-strapped nation began in June.

What else did the IMF say?

Expressing concern over Sri Lanka’s ability to repay all loans, the IMF said: “As Sri Lanka’s public debt is deemed unsustainable, IMF Executive Board approval of the EFF program would require adequate assurances from Sri Lanka’s creditors that debt sustainability will be restored. “

Debt restructuring talks with the World Bank next month

The IMF visit will come close to debt restructuring talks with the World Bank scheduled for next month.

The island nation’s total debt is around $97 billion, including $51 to Japan, China, the Asian Development Bank and India.

President Wickremesinghe hopes to obtain around 2 to 3 billion dollars.

Mismanagement by the Rajapaksas has compounded Sri Lanka’s economic difficulties.

What has affected Sri Lanka’s economy?

Experts say given that Sri Lanka has more debt than its GDP and its foreign exchange (forex) reserves fell to $1.82 billion in July 2022, the island nation will struggle to emerge from the crisis. anytime soon.

Colombo’s main source of income is tourism, which has been hit hard by the COVID-19 pandemic and the global political crisis.

“The former president must be tried for embezzlement”

Sri Lanka’s main opposition party said on Sunday that Rajapaksa was to stand trial over allegations of embezzlement.

The Samagi Jana Balawegaya said the former president can return to the country but no longer enjoys legal immunity.

“He should face trials and should be penalized if found guilty,” said politician Ajith P Perera.

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