Sri Lanka has asked the International Monetary Fund (IMF) for urgent financial assistance and the global lender may consider it after initial reluctance, an aide to the country’s finance minister has said.
Protests have broken out in the island nation as it battles a devastating financial crisis caused by the effects of COVID-19, the mismanagement of government finances and the increase in fuel prices that have sapped foreign exchange reserves.
A delegation led by Sri Lankan Finance Minister Ali Sabry began formal talks with the IMF in Washington, DC, on Monday for a program the government hopes will help boost its reserves and attract bridge financing to pay for essential imports of fuel, food and medicine.
“The (foreign minister) applied for a Rapid Financing Instrument (RFI) to mitigate current supply chain issues, but was initially deemed by the IMF to not meet their criteria,” Sabry’s aide Shamir Zavahir said. On twitter.
“However, India has subsequently also made representations in an RFI for (Sri Lanka) and the IMF may consider this request due to the unique circumstances.”
request for a Rapid Financing Instrument (RFI) to mitigate current supply chain problems, although initially the IMF considers that it does not meet its criteria. However, India has subsequently also made representations in an RFI for SL and the IMF may consider this request due to the
—Shamir Zavahir (@ShamirZavahir) April 19, 2022
The aggregate that the IMF “appears to be positive” about granting an extended fund facility, a longer facility of up to four years with easier and longer repayment terms. “Ideally, if this can be accelerated, it can help stabilize things in the short term until long term solutions emerge,” he tweeted.
Sri Lanka is seeking $3 billion in the coming months from multiple sources including the IMF, World Bank and India to avert crisis, Sabry told Reuters earlier this month.
Both India and China have already provided billions of dollars in financial support to Sri Lanka. Sabry met his Indian counterpart Nirmala Sitharaman on the sidelines of the IMF deliberations, with both sides saying they agreed to deepen their cooperation.
“India will fully support Sri Lanka’s discussions with the IMF, especially on the special request made to speed up an extended facility of funds,” Sabry’s office said, citing his meeting with Sitharaman.
The sources have told Reuters that India will continue to help its neighbor as it tries to regain influence lost by China in recent years. Beijing is one of Sri Lanka’s biggest lenders and has also built ports and roads there.
Last week, the country’s central bank said it would suspend payment of part of its foreign debt pending a restructuring.
In Colombo, the commercial capital, protests demanding the ouster of President Gotabaya Rajapaksa have been going on for more than a week.
In parliament on Tuesday, the prime minister reiterated a call for a unity government that the opposition has rejected.
In an attempt to quell the protests and demands for their resignation, the Rajapaksa brothers also offered to reduce the president’s executive powers by amending the constitution.
“Together with the support of the president, we will move towards sweeping constitutional reforms,” said Mahinda Rajapaksa, who was also the president. “We ask for the support of the public, the opposition and all other interested parties.”
Sri Lankan opposition leader Sajith Premadasa is lobbying for support in parliament to change the constitution and remove the Rajapaksa family from power.
“We all have to swallow a bitter pill, or even multiple pills, because the consequences of irrationality over the last few years have hit home,” Premadasa, leader of the main opposition Samagi Jana Balawegaya party, said in an interview with Bloomberg. Television. .
“It’s going to be a time of extreme austerity,” he added. “And the people of Sri Lanka must understand this reality. But if we take these bold steps, we can overcome all the challenges, all the obstacles that we face.”