The International Monetary Fund said Wednesday that it has pushed cash-strapped Sri Lanka to “restructure” its large foreign debt before finishing a rescue package, as anti-government demonstrations rose in intensity around the island.
This week, Sri Lanka began negotiations with the International Monetary Fund (IMF) in Washington, DC, after reporting its first-ever foreign debt default.
The South Asian country has been rocked by a series of demonstrations over food and fuel shortages since its independence in 1948.
According to Masahiro Nozaki, the IMF’s country director in Japan, “when the IMF deems that a nation’s debt is not sustainable, the country needs to take actions to restore debt sustainability before IMF funding.”
“Adequate guarantees that debt sustainability would be restored are required for approval of an IMF-supported programme for Sri Lanka.”
However, despite the fact that discussions with Sri Lanka are still in their “early stages,” the IMF is “extremely worried” about economic conditions and human difficulties, in particular for Sri Lanka’s poor and vulnerable population.
According to the International Monetary Fund (IMF), Sri Lanka’s $51 billion in foreign debt is unsustainable.
The International Monetary Fund (IMF) has stated that Colombo’s existing debt makes it ineligible for emergency finance.
A “haircut” — a decrease in the value of creditors’ assets — or lengthier payback terms have been made plain by sources in the country’s finance ministry.
Foreign currency inflows were expected to be encouraged by government actions roughly two weeks ago, when interest rates were virtually doubled and currency depreciation accelerated.
The Sri Lankan president said on Monday that the country should have sought help from the International Monetary Fund “far earlier.”
Even the most basic necessities, like as food, gasoline, and medication, are in limited supply throughout the country. Protests around the country became violent on Tuesday due to widespread food shortages.
Unrest in a central town claimed the life of a man, wounding 29, while hundreds demonstrated outside the president’s office in Colombo, calling for his resignation.
Courtesy Bol News