The International Monetary Fund has pledged help to Sri Lanka's debt-ridden government in its attempts to alleviate the present economic crisis, describing early talks with a team led by Finance Minister Ali Sabry as "fruitful." Sri Lanka has been in the midst of extraordinary economic turbulence since gaining independence from the United Kingdom in 1948.
The problem is exacerbated by a lack of foreign currency, which has left the government unable to pay for essential food and fuel imports, resulting in severe shortages and expensive pricing.
Sabry and his entourage, which also included Central Bank Governor Nandalal Weerasinghe, are now in Washington for technical negotiations on an IMF-backed initiative.
"The Sri Lankan delegation and the IMF staff held constructive technical discussions on the government's desire for an IMF-backed programme." The IMF said in a statement on Saturday that the talks addressed "recent economic and financial developments in Sri Lanka, as well as the need to undertake a credible and cohesive strategy to restore macroeconomic stability."
Sri Lanka requires at least USD 4 billion to overcome its rising economic troubles, and Sabry has been in negotiations with the World Bank as well as nations such as China and Japan for financial help.
"The IMF team will continue to assist Sri Lanka's efforts to overcome the present economic crisis by working closely with the government on their economic programme and engaging with all other stakeholders in support of a fast resolution of the crisis," the statement added.
The international lender, located in Washington, praised the Sri Lankan government's efforts to start talks with creditors. Sri Lanka ceased debt servicing for the first time in its history on April 12. "The IMF team applauded the authorities' plan to engage in a productive conversation with their creditors," the statement continued. India agreed to give an additional USD 500 million credit line to Sri Lanka on Saturday to assist with gasoline imports.
India has previously agreed to delay USD 1.5 billion in import payments due to the Asian Clearing Union by Sri Lanka. The duration of a USD 400 million exchange issued in January this year was also extended on Friday, according to the Indian High Commission.
Sri Lankan President Gotabaya Rajapaksa said on Saturday that the crisis-hit country welcomed investments, technology transfers, and finance for its sustainability initiatives, as well as debt restructuring cooperation to boost the country's economic recovery at this critical moment.
The Sri Lankan government said last week that it would temporarily default on USD 35.5 billion in international debt due to the epidemic and the crisis in Ukraine, which rendered payments to overseas creditors difficult. Food shortages, increasing gasoline costs, and significant power outages have erupted in Sri Lanka in recent weeks as a result of the country's extraordinary financial crisis.