Sri Lanka is to resume bailout loan discussions with the International Monetary Fund (IMF) after the World Bank said it would not be able to offer the country fresh funding without “deep structural reforms , ” the Finance ministry announced.
Debt ridden Government is set to reach a staff-level agreement with the International Monetary Fund (IMF) within a couple of months and an economic reform programme for a bailout package would be finalised by next month (August 2022).
Debt restructuring process will also be commenced soon to reach an agreement with creditors as a prelude for the IMF towards providing financial assistance, a top official closely connected to IMF negotiations disclosed.
The IMF is closely monitoring the ongoing developments in Sri Lanka, a spokesman of the monetary agency revealed.
He noted that” they are continuing technical discussions with their counterparts in the Ministry of Finance and Central Bank and are ready for policy discussions with the new administration towards reaching a staff-level agreement on the Extended Fund Facility (EFF) arrangement.”
Chinese Ambassador Qi Zenhong assured China, as member of the International Monetary Fund, will provide necessary support provided at the meeting of its Board of Directors, a statement from the Prime Minister’s office said.
The ambassador called on Prime Minister Dinesh Gunawardane and discussed economic, agricultural and cultural relations between China and Sri Lanka in the face of the current economic crisis.
However after the staff level agreement is reached, an application jointly signed by the Minister of Finance and the Governor of the Central Bank should be made by Sri Lanka to IMF, several economic experts who are conversent with IMF procedure disclosed.
Then it should be approved by the IMF’s executive board which normally approves the loan requests by consensus ,they added.
In this context, an opinion expressed by the US Senate Foreign Relations Committee may hamper Sri Lanka’s attempt at getting approval, eminent economic expert claimed.
That committee has imposed three additional conditions, namely, making the Central Bank independent, observing the Rule of Law, and establishing an effective anti-corruption mechanism, he added.
The discussions for a bailout from the IMF could last months despite the urgent need Sri Lanka is also in the process of trying to reestablish a functioning government under the leadership of President Ranil Wickremesinghe reaching a deal on a broad coalition with. opposition parties.
