Monday, 4 July, 2022
E-paper

IMF to consider providing quick financial aid to Sri Lanka

The International Monetary Fund will consider providing quick financial assistance to debt-burdened Sri Lanka following representations by India, Sri Lanka's finance ministry said on Tuesday.

A delegation headed by Sri Lanka's Finance Minister Ali Sabry kicked off formal talks with the IMF in Washington on Monday for a programme the government hopes will help top up its reserves and attract bridge financing to pay for essential imports of fuel, food and medicines, report agencies.

Negotiations with IMF started on a positive note today.They see the recent steps taken to increase the interest rates and calling for RfP’s for the appointment of Intl. Financial/Legal Advisors as good first steps towards a possible restructuring Programme. FM made a

Shamir Zavahir, an aide to Sabry, said on Twitter Sri Lanka asked for a loan under the rapid financial instrument (RFI) window, meant for countries needing urgent balance-of-payment support. But the global lender was initially not inclined to grant the request, he said.

"The IMF has subsequently informed Minister Sabry that India had also made representations on behalf of Sri Lanka for an RFI," Sri Lanka's finance ministry said.

"It had been communicated that IMF will consider the special request made despite it being outside of the standard circumstances for the issuance of an RFI."

Sri Lanka's devastating financial crisis has come as the effects of Covid-19 exacerbated mismanaged government finances and as rising prices of fuel sapped foreign reserves.

Fuel, power, food and medicines have been running low for weeks.

Street protests have erupted against President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa, in the island nation of 22 million people.

Sri Lanka is seeking $3 billion in the coming months from multiple sources including the IMF, the World Bank and India to stave off the crisis, Mr Sabry said earlier this month.

Both India and China have already extended billions of dollars in financial support to Sri Lanka.

Sabry met his Indian counterpart Nirmala Sitharaman on the sidelines of the IMF deliberations, and both sides said they agreed to deepen their co-operation.

"India will fully support the deliberations of Sri Lanka with the IMF, especially on the special request made for expediting an extended fund facility," Mr Sabry's office said, citing his meeting with Ms Sitharaman.

Last week, Sri Lanka's central bank said it was suspending repayment on some of its foreign debt pending a restructure.

In the commercial capital Colombo, protests demanding the ouster of the Rajapaksas have dragged on for more than a week.

In parliament on Tuesday, the prime minister reiterated a call for a unity government that the opposition has rejected.

"It is not the wish of any government to keep their people in queues and make them suffer with power cuts and other shortages," he said.

"We have appealed for help and received positive responses from the World Bank and other friendly countries. We will not keep the public in lines for long."