Sri Lankan PM says country's economy has collapsed; seeks further credit from IMF

Sri Lanka's Prime Minister announced on June 22 that he will hold talks with the International Monetary Fund (IMF) in order to get an agreement for an additional credit facility. PM Wickremesinghe said that his country's debt-ridden economy "collapsed" following months of food, gasoline, and electricity shortages, and that it cannot even purchase imported oil.

“The only safe option before us now is to hold discussions with the International Monetary Fund. In fact, this is our only option. We must take this path. Following discussions with the Central Bank, Treasury, relevant government officials, professionals and experts this plan has already been formulated. I urge you to inform us of a better solution if available. In fact, if you are in possession of a practical and more favourable plan for the country we call on you to put it forward,” PM Wickremesinghe stated, ANI reported.

The Prime Minister stated that an IMF team arrived in Sri Lanka on June 20. Wickremesinghe praised India's assistance, but added that financial assistance supplied by India is not "charitable donations," and the island nation facing a grave economic crisis must have a strategy in place to repay these loans. Sri Lanka is experiencing its greatest economic crisis since its independence in 1948, resulting in a severe lack of vital products such as food, medication, cooking gas, and fuel throughout the island nation.

The entire foreign debt of Sri Lanka is USD 51 billion

The almost insolvent government, which is suffering from an acute foreign currency crisis that has resulted in foreign debt default, announced in April that it is deferring roughly USD 7 billion in foreign debt repayment due this year, out of approximately USD 25 billion due until 2026. The entire foreign debt of Sri Lanka is USD 51 billion. Since January of this year, Indian credit lines have thrown a lifeline to Sri Lanka despite mounting public outrage over the country's deteriorating economic conditions.

Wickremesinghe also stated that a team of Treasury Department representatives from the United States will come in Sri Lanka on Monday. He also outlined the ideas for resolving the island nation's issue. He went on to say that, in addition to negotiations with the IMF, Sri Lanka will conduct a credit aid meeting with India, Japan, and China — Sri Lanka's primary lending countries.

Image: ANI