The Government has dispatched the formal request for a support program to the International Monetary Fund (IMF) last week.
The letter by Treasury Secretary S.R. Attygalle had indicated the Government’s readiness for an IMF program as well as requests for relevant meetings to discuss it during Finance Minister Basil Rajapaksa’s visit to Washington DC in mid-April. In parallel, Finance Minister will also meet with officials of the World Bank during his stay in Washington DC.
Sources said that the request is being channelled via Sri Lanka’s Alternative Executive Director in the IMF Dr. Chandranath Amarasekara.
The letter follows President Gotabaya Rajapaksa on Wednesday informing the nation that the Government has decided to engage with the IMF.
In his address, the President said the Government initiated discussions with international financial institutions as well as with friendly countries regarding repayment of loan instalments.
“The Government is in discussions with various parties to implement a new method regarding this which will be beneficial to our country,” said the President, who also referred to his discussion with the visiting IMF delegation earlier last week.
“Through those discussions, we hope to find a way to pay off our annual loan instalments, sovereign bonds, and so on. Subsequent to my discussions with the IMF, I have decided to work with them after examining the advantages and disadvantages,” the President said during his address to the nation.
The Government’s decision was despite reservations repeatedly expressed by Central Bank Governor Nivard Cabraal that Sri Lanka does not need to go to the IMF as “home grown” solutions were adequate and delivering the desired results.
Sri Lanka has nearly $ 7 billion in foreign debt servicing this year and a further $ 25 billion between 2023 and 2026.
IMF Communications Department Director Gerry Rice on Friday in response to international media questions acknowledged that Sri Lanka is clearly another country facing mounting economic challenges.
He said that in the Article IV consultation recently, the IMF highlighted the urgent need to implement a credible and coherent strategy to restore macroeconomic stability and debt sustainability while protecting vulnerable groups through strengthened well targeted social safety nets.
Though noting that he was not in a position to share further details, Rice said: “But I can tell you we stand ready to discuss all options for Sri Lanka.”