A senior International Monetary Fund official has said, Sri Lanka must tighten its monetary policy, raise taxes and adopt flexible exchange rates to address the debt crisis.
The government has requested loans from the IMF as it struggles to pay for imports amid crushing debt and a sharp drop in foreign exchange reserves that have fueled soaring inflation.
Speaking at an online news conference, Acting director of the IMF’s Asia and Pacific Department Anne-Marie Gulde-Wolf said, “We’ve had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and couple of days before.”
Minister of Finance Ali Sabry was in Washington last week to talk to the IMF, the World Bank, India and others about financing help for the government, which has suspended payments on portions of its US$51 billion in external debt.
Gulde-Wolf also called on Sri Lanka for measures to increase tax revenues to address critical spending and progress toward debt sustainability.
She however has not replied to a question on the total value for any IMF package, nor the estimated timing of a conclusion to the negotiations with Sri Lanka.