A team from the International Monetary Fund (IMF) is scheduled to arrive in the island today to hold discussions with the government and officials regarding a bailout package to support Sri Lanka to overcome the current economic crisis.
The IMF team is expected to remain in the country until the 30th of June to discuss the economic programme of the government which will lead to the bailout package.
The IMF has also reaffirmed its commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies.
An International Monetary Fund (IMF) team led by Peter Breuer and Masahiro Nozaki conducted a virtual mission with the Sri Lankan authorities from the 9th to the 24th of May on an economic program that could be supported by an IMF lending arrangement.
The IMF team met with Prime Minister Ranil Wickremesinghe at the concluding meeting, following technical discussions with the economic team led by Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe and Secretary to the Treasury Mahinda Siriwardana.
The team also met with representatives of the private sector, the financial sector, and development partners.
At the conclusion of the mission, the IMF team said, Sri Lanka is facing difficult economic conditions and severe balance of payments problems.
It added, “Recent economic indicators suggest that economic activities have been negatively affected by fuel and power shortages. Rising global food and oil prices have further added to the balance of payments pressures. Inflation has accelerated driven by many factors, including the shortages of goods, fuel price increases, and currency depreciation.”
The IMF team noted that it is deeply concerned about the impact of the ongoing crisis on the people, particularly the poor and vulnerable groups.
The IMF team held technical discussions on a comprehensive reform package to restore macroeconomic stability and debt sustainability.
It said the team made good progress in assessing the economic situation and in identifying policy priorities to be taken going forward.
In a statement, IMF officials noted, “The discussions focused on restoring fiscal sustainability while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and structural reforms to enhance growth and strengthen governance. We expect that these discussions will help the authorities formulate their reform program.”
The IMF team also welcomed the appointment of financial and legal advisors to engage in a collaborative dialogue with creditors as an important step towards restoring public debt sustainability.
It said, “IMF staff will continue to monitor the economic and political situation very closely and engage with the authorities to formulate concrete measures under an IMF-supported program, as well as broader stakeholders to support a timely resolution of the crisis. We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies.”
Sri Lanka which is facing an unprecedented economic crisis is seeking to obtain around $5 billion to deal with the on-going issues.
Meanwhile, Central Bank Governor Nandalal Weerasinghe has said Sri Lanka could have avoided its current economic turmoil if it had gone to the International Monetary Fund (IMF) for a bailout sooner.
The Governor during a recent interview admitted that the delay in seeking outside help was a mistake.
Prime Minister Ranil Wickremesinghe has confirmed Sri Lanka is seeking support from international donors and friendly nations to overcome the crisis.
Prime Minister Wickremesinghe also noted that he is hopeful that a staff-level agreement will be reached by the end of the month.
Leader of the United National Party Ranil Wickremesinghe was appointed Sri Lanka’s Prime Minister for the sixth occasion, just over a month ago, as Sri Lanka was facing 15-hour power cuts and a major energy crisis.
The Prime Minister has also been appointed as the Minister of Finance, Economic Stabilization and National Policies to steer the country forward.
Following his appointment, Premier Wickremesinghe has taken a number of steps to address the current crisis including tax reforms.
Prime Minister Ranil Wickremesinghe is scheduled to present an interim budget shortly to provide relief to the people by reallocating capital expenditure.
The World Bank, the United Nations and several multilateral agencies have also extended their support to Sri Lanka in recent weeks to overcome the crisis.