Daily Times

Crisis-hit Sri Lanka pleaded on Friday for a swift agreement with its international creditors to clear the way for a desperately needed $2.9 billion IMF bailout.

The International Monetary Fund’s board needs to ratify this month’s staff-level agreement on the tentative $2.9 billion lifeline conditional on Colombo striking a deal with creditors to restructure its debt. After running out of foreign exchange to finance even the most essential imports, Sri Lanka in mid-April defaulted on its external debt. China is its largest single creditor. The unprecedented foreign exchange crisis led to the fall of then-president Gotabaya Rajapaksa in mid-July after months of street protests. His successor, Ranil Wickremesinghe, has taken a tough line against protesters, and has also eased some of the shortages by implementing fuel rationing. He has also secured an agreement with the World Bank to divert funds meant for poverty relief to finance imports of life-saving medicines and equipment. The country’s 22 million people have endured galloping inflation, prolonged blackouts and acute shortages of food, fuel and medicines since late last year. Sri Lanka’s central bank, in its first virtual meeting with creditors on Friday, asked them for “financing assurances” — code for a reduction to the debt — but did not indicate how much was expected. A presentation to creditors showed that the Central Bank of Sri Lanka expects “financing assurances from public and private partners” by mid-November. The bank hopes final IMF board approval for the bailout can be obtained by mid-December, and urged creditors to organise themselves into an ad hoc group to negotiate collectively.