Sri Lanka says open to talks with IMF as economic crisis deepens

Sri Lanka is open to talks with the International Monetary Fund (IMF) and other multilateral lenders for help, a cabinet spokesman said on Tuesday, as it faces its worst economic crisis. For years.

“Sri Lanka has requested assistance from the IMF on several occasions in the past and we are always open to this option,” said cabinet spokesman and plantations minister Ramesh Pathirana.

Sri Lanka’s foreign exchange reserves have fallen to $2.36 billion, hitting imports of essential goods, including fuel, and inflation is accelerating.

The island nation of 22 million also faces debt repayment obligations of around $4 billion this year, and opposition leaders and economists are pushing the government to seek help from organizations like the IMF.

“We are keeping lines of communication open with the IMF and other multilateral lenders such as the Asian Development Bank,” Pathirana told reporters.

Some opposition members have also urged the government to table in parliament an upcoming assessment of the IMF’s economic and financial situation, conducted as part of its regular Article IV consultations.

“It is essential that the government table this document in parliament and clearly set out its plan to deal with this crisis in a sustainable way,” said opposition MP Harsha de Silva.

‘HOPE AND PRAY’

With fuel stocks sufficient for only a few days’ supplies, Pathirana said the central bank had been tasked with releasing funds for fuel shipments.

Sri Lanka is trying to arrange a $35 million payment for a shipment of 40,000 tonnes of diesel, which would still only be enough to meet demand for about six days. Read the full story

The fuel shortage is also affecting power supply, with the power regulator warning of five to six hours a day of continuous blackouts called load shedding over the next few days unless power to thermal power plants increases.

Pathirana said any further increase in global oil prices would make the situation even more difficult.

“We hope and pray that there will be no war in Ukraine because the oil price spike will really hurt Sri Lanka,” he said.

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