Sri Lanka’s crisis-hit Prime Minister Ranil Wickremesinghe, who is also finance minister, said on Thursday the government was targeting $5 billion this year for repayments, plus another $1 billion to bolster the country’s reserves .
He also said ongoing negotiations with the International Monetary Fund (IMF) for a bailout could be concluded by the end of this month.
Sri Lanka, which is going through the worst economic crisis since its independence from Britain in 1945, began talks with the IMF on April 18.
Speaking to representatives of the Joint Trade Chambers, Wickremesinghe said on Thursday debt restructuring had begun, following the appointment of financial and legal advisers. It was a precondition for an IMF program.
He said ongoing negotiations with the global lender for a bailout could be concluded by the end of this month.
Wickremesinghe said the government was targeting $5 billion this year for repayments, plus another $1 billion to bolster the country’s reserves.
He said Sri Lanka’s bridge financing needs would depend on reaching an agreement with the IMF.
Wickremesinghe said talks were continuing with donor countries and that relations with Japan, which had broken down, would take some time to recover and regain their trust.
On the shortage of medicines, he said former Maldivian President Mohamed Nasheed was leading the international appeal for urgently needed medical supplies.
Indrajith Coomaraswamy, who is the presidential adviser for the economy, told a seminar on Thursday that the staff-level agreement with the IMF could be concluded in 4 to 5 weeks.
He said the realization of the IMF funds would depend on Sri Lanka’s action to restructure its international debt.
The country on the verge of bankruptcy, with an acute currency crisis that led to a default on external debt payments, announced in mid-April that it was suspending repayment of nearly $7 billion in external debt due for this year out of approximately $25 billion due until 2026. Sri Lanka’s total external debt stands at $51 billion.
The IMF said last week it required “sufficient assurance” from the country that it will restore debt sustainability during the debt restructuring process.
“Given that Sri Lanka’s public debt is deemed unsustainable, Board approval of an IMF-supported program for the country would require adequate assurances that debt sustainability will be restored,” the Board said. IMF.
Wickremesinghe said last week that he would quickly prepare an economic reform program and seek IMF approval. He had also met with the presidents and senior management of all public and private banks in the country and inquired of them on such matters as the dollar deficit and credit expansion as well as the amount of the saving.
The economic crisis has led to severe shortages of essentials like food, medicine, cooking gas and other fuels, toilet paper and even matches, with Sri Lankans forced to queue for months for hours in front of stores to buy fuel and cooking gas.
Protesters have occupied the entrance to President Gotabaya Rajapaksa’s office for almost 50 days now, demanding his resignation.
The president’s brother and former prime minister Mahinda Rajapaksa resigned earlier this month following violence across the country when his supporters attacked peaceful protesters.
The new prime minister, Wickremesinghe, has promised to propose constitutional changes to reduce presidential powers, strengthen parliament and resolve Sri Lanka’s economic woes.
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