Sri Lanka, IMF to start next round of technical talks

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Picture used for illustrative purpose only.

The International Monetary Fund (IMF) announced it will begin the next round of technical discussions with Sri Lanka from May 9-23 IMF’s mission chief for Sri Lanka, Masahiro Nozaki said that the Fund is committed to assisting Sri Lanka, in line with its policies, reports Xinhua news agency.

“Because Sri Lanka’s debt is assessed as unsustainable, approval of IMF financing, including through a Rapid Financing Instrument, would require adequate assurances that debt sustainability will be restored,” he said. The two sides held the first round of discussions at the IMF headquarters last month.

Sri Lanka hopes for a Rapid Finance Instrument (RFI) facility as well as a larger Extended Fund Facility (EFF) from the IMF to overcome its foreign currency shortage issues that had led to an economic crisis.

Crisis-hit Sri Lanka’s inflation hit a record high for the sixth consecutive month, official data showed recently as the government asked the IMF for an urgent bailout.

The broad-based National Consumer Price Index (NCPI) rose 21.5 per cent year-on-year in March, more than four times the 5.1 per cent inflation of a year earlier. Food inflation in March stood at 29.5 per cent, according to the latest data from the Department of Census and Statistics.  The figures are likely to rise further: the state-run oil company has subsequently raised the price of diesel, commonly used in public transport, by 64.2 per cent.

 “When the IMF determines that a country’s debt is not sustainable, the country needs to take steps to restore debt sustainability prior to IMF lending,” the Fund’s country director Masahiro Nozaki said in a statement on Wednesday.

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