In the midst of the country’s greatest financial crisis in more than 70 years, a team from the International Monetary Fund (IMF) will meet with Sri Lanka’s president for discussions to finalize a bailout package, including restructuring debt of roughly $29 billion.
On Wednesday, the IMF will make its second such visit to the island in the Indian Ocean in the past three months to get a staff-level agreement with the international bank for a potential $3 billion program to help it navigate the crisis.
“The IMF team will meet with the president and a finance ministry delegation later today,” told by an official at the presidential secretariat to the media.
Along with other authorities, the team will have discussions with the governor of the central bank and members of Sri Lanka’s financial and legal advisors, Lazard’s and Clifford Chance.
The key issue preventing a staff-level agreement from being reached in September is how to establish a viable path for Sri Lanka’s huge debt, which was 114 % of GDP at the end of last year.
According to data from the finance ministry, Sri Lanka has $9.6 billion in bilateral debt and $19.8 billion in private credit, which includes foreign sovereign bonds.
The COVID-19 pandemic’s combined impacts with economic mismanagement caused the nation’s worst financial crisis since gaining independence from Britain in 1948, sparking unheard-of protests.
After a massive rebellion in July that was brought on by what many Sri Lankans perceived as his poor management of the financial crisis, the country’s then-president, Gotabaya Rajapaksa, departed the country and resigned.
After Sri Lanka receives IMF assistance, the country’s president, Ranil Wickremesinghe, intends to seek Japan to take the lead in negotiations on bilateral debt restructuring.
