IMF wants Sri Lanka to reach deal with creditors

By Easwaran Rutnam

Sri Lanka must reach an agreement with its creditors before the International Monitoring Fund (IMF) can step in and provide financial assistance, the IMF said.

Responding to questions during a Twitter Space discussion last evening, IMF Chief Economist Pierre-Olivier Gourinchas said that the IMF is concerned about the situation in Sri Lanka.

“Sri Lanka had a balance of payment crisis. The foreign exchange reserves ran dry and there was nothing they could use to pay for basic necessities and pharmaceuticals and energy,” he said.

He said the IMF is concerned about the impact the economic crisis is having on vulnerable groups in Sri Lanka.

“We are deeply concerned about the impact the crisis is having especially on poor and vulnerable groups. We have seen the reports. We have seen the difficulties they are facing,” he said.

Gourinchas said that the IMF is having talks with the new Government in Sri Lanka.

“We are looking forward to work with them,” he said.

However, he said Sri Lanka needs to reach an agreement with its creditors before any agreement can be reached between the IMF and the Sri Lankan Government.

The IMF wants Sri Lanka to reach a debt restructuring agreement with creditors, including China.

Earlier this month, IMF Spokesperson Gerry Rice had said that the crisis in Sri Lanka has interrupted the ongoing talks with the IMF.

“So, like everyone else we are, of course, deeply concerned about the ongoing crisis, its impact on the Sri Lankan people, and particularly the poor and the vulnerable groups in Sri Lanka. Again, like everyone else, we’re closely monitoring the political and the social developments there,” Rice had said at the time.

He said the IMF hopes for a resolution of the current situation that would allow for the resumption of a dialogue on an IMF supported programme.

Sri Lanka’s public debt is assessed as unsustainable and as is the case with every IMF programme, a programme would require adequate assurances on debt sustainability. (Courtesy Daily Mirror)