IMF seeks stability to resume talks with Sri Lanka, expresses concern over ongoing crisis

As Sri Lanka continues to witness political and economic upheaval, the International Monetary Fund (IMF) expressed grave concern about the continuing crisis and its effects on the Sri Lankan people, particularly the country's impoverished and most vulnerable groups. During a press briefing, the Director of the Communications Department of the IMF, Gerry Rice said, “We are closely monitoring the political and the social developments there.” He also added that they are hoping that the current issue can be resolved, so they can resume talking about a program that is supported by the IMF.  

According to a statement from the IMF, Rice further noted that in June there was an IMF staff team in Colombo. He then highlighted the fact that they did engage in fruitful discussions with the government on a package of economic policies and reforms that may be helped by, even indirectly, an IMF program. However, currently, they don't have a program with Sri Lanka, he said. 

In addition to this, Rice said, “The high-level discussions with the authorities that we would need to begin discussions on a program, we hope again, that these would be able to resume as soon as possible.” 

Rice even indicated that the debt crisis is a significant topic of discussion in Sri Lanka. According to the statement, Rice stated that it is determined that Sri Lanka's national debt is unsustainable, and as is the case with every IMF program—not only the one for Sri Lanka—the Board must approve the scheme. Although the IMF is not there yet, a program would need to provide sufficient guarantees of debt sustainability in order for the Board to approve it, he added. 

IMF-Sri Lanka talks

Earlier in July, Sri Lanka said that it is creating a strategy to resuscitate the ailing economy and would provide the IMF with a debt restructuring proposal by the end of August. According to Prime Minister Ranil Wickremesinghe, the island nation's 22 million citizens have been unable to pay for imports of petroleum, food, fertiliser, and other necessities due to the depletion of the previous currency reserve. 

However, as per local media, the administration was able to set up a session of talks with the International Monetary Fund (IMF) to present a proposal created by the financial and legal specialists Lazard and Clifford. 

Meanwhile, Nandalal Weerasinghe, the governor of Sri Lanka's central bank, told the BBC on Thursday that the island will "shut down" in the absence of a stable administration. While talking about the Sri Lanka crisis, he said that there would be "a lot of uncertainty" regarding foreign exchange payments and obtaining an IMF rescue package in the absence of a governing authority. 

(Image: Twitter/ @IMFSpokesperson/ AP)