The International Monetary Fund (IMF) said Sri Lanka should initiate debt restructuring talks with its bilateral lender China, while the island state’s government seeks financing loans from a Washington-based fund.
,China “There is a big creditor, and Sri Lanka will have to actively engage with it on debt restructuring,” Krishna Srinivasan, director of the IMF’s Asia and Pacific division, told Reuters in an interview on Tuesday.
The island of 22 million is currently engulfed by its most severe economic and political crisis in recent history.
six-time prime minister Ranil Wickremesinghe He was recently appointed as president after ousting his predecessor after months of acute shortages of fuel, food and medicines.
The government has recently decided to restrict fuel imports for 12 months.
According to data from the Institute of International Finance (IFF), the country owes about $6.5 billion in financing, including development bank loans and central bank swaps.
The world’s second largest economy has invested in projects such as highways, a port, an airport and a coal power plant. Japan and India are also bilateral creditors of Sri Lanka.
“Sri Lanka has to engage with its lenders, both private and official bilateral, on a debt exercise to ensure the stability of the debt,” Srinivasan said, as he pointed out technical talks on a new IMF programme. With both officers. Ministry of Finance and Central Bank.
Sri Lanka’s foreign ministry and central bank did not immediately respond to a request for comment. The Chinese embassy in Sri Lanka did not immediately respond.
The South Asian nation has requested an IMF rescue plan to overcome its worst economic crisis since independence in 1948. The country defaulted on a bond payment loan earlier this year on its $12 billion foreign debt with private creditors, as it struggles to pay for imports. basic stuff.
“There are some areas where we need to make more progress,” Srinivasan said, but he declined to specify the top reforms that Sri Lanka must address in other areas to reach an agreement.
An Extended Funds Facility (EFF) program from the IMF, which will be the 17th Plan to Fund the Nation, requires countries to undertake structural economic reform https://www.imf.org/en/About/Factsheets/Sheets/2016/ 08/01/20/56/Extended-Fund-Facility.
The Maldives and Laos are examples of countries in the region facing huge debt situations.
Srinivasan said the fund is advising countries to “spend more to reduce the impact on the poor and vulnerable, but keep budget neutral by reducing spending elsewhere or increasing revenue where possible.”
“It’s not just public debt, but corporate debt and domestic debt as well – and that has an impact on policymaking,” he said. “The loan issue is very important.”
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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