Cash-strapped Sri Lanka seeks IMF bailout

COLOMBO: Sri Lanka will search an International Monetary Fund bailout, President Gotabaya Rajapaksa mentioned on Wednesday, to battle file inflation and unprecedented meals and gas shortages because the nation runs out of {dollars} to finance imports. The South Asia nation is within the throes of its worst financial disaster since independence from Britain in 1948 with lengthy queues forming outdoors gasoline stations and rolling every day blackouts imposed throughout the nation. “Subsequent to my discussions with the International Monetary Fund, I have decided to work with them,” Rajapaksa mentioned in an deal with to the nation a day after assembly with an IMF delegation in Colombo.

An enormous crowd stormed the president’s seaside workplace over runaway costs with the rising value of meals, medication and different important items inflicting severe hardship for Sri Lanka’s 22-million folks. Rajapaksa urged residents to play their half and preserve imported vitality to assist authorities handle the scarce overseas trade reserves. “By limiting the use of fuel and electricity as much as possible, the citizens too can extend their support to the country at this time,” Rajapaksa mentioned.

“I hope that you will understand the responsibility lies with you at this challenging time.” He added that IMF assist was wanted to safe “a new method” to repay exterior debt and sovereign bonds this yr with round $6.9 billion wanted this yr for debt servicing.

Long exhausting street

The coronavirus pandemic has hammered the island’s tourism sector-a key overseas trade earner-while overseas employee remittances have additionally declined. Sri Lanka’s overseas reserves, which sat at $7.5 billion when Rajapaksa took workplace in November 2019, dropped to $2.3 billion on the finish of February. The president mentioned the overseas trade disaster was the basis reason behind his nation’s present points, including he was conscious of the “difficulties” confronted by folks queuing for lengthy hours to purchase important items.

“Today, I am determined to make tough decisions to find solutions to the inconveniences that the people are experiencing,” he mentioned. But former central financial institution deputy governor W A Wijewardena mentioned he anticipated Rajapaksa to announce a full-fledged IMF funding program to deal with the stability of funds disaster. “I think his address didn’t go far enough,” Wijewardena advised AFP. “The market was looking for a mention of IMF funding that would have underwritten the (entire) economy.”

Economist Rehana Thowfeek mentioned the federal government has a whole lot of work to do to revive the battered economic system. “Good to hear reassurances from the president of the IMF route,” she advised AFP. “The sooner a formal request is made (to the IMF), the sooner Sri Lanka can begin down the long and hard road ahead.” International ranking companies have downgraded Sri Lanka because the pandemic hit, successfully blocking its entry to industrial borrowings. They have additionally raised doubts about Colombo’s means to service its exterior debt amounting to only over $51 billion. – AFP

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