The World Bank loan of $700 million to cash strapped Sri Lanka will provide the Ranil Wickremesinghe government the much-required breather till it finalises a bailout package with the International Monetary Fund. Wickremesinghe has already initiated talks with the IMF, which has assured support to the debt-ridden nation with 22 million people.
The IMF team has held technical discussions on a comprehensive reform package to restore macroeconomic stability and debt sustainability.
“The team made good progress in assessing the economic situation and in identifying policy priorities to be taken going forward. The discussions focused on restoring fiscal sustainability while protecting the vulnerable and poor; ensuring credibility of the monetary policy and exchange rate regimes; preserving financial sector stability; and structural reforms to enhance growth and strengthen governance. We expect that these discussions will help the authorities formulate their reform program.,” the multilateral agency said after concluding a virtual mission in the island nation.
The island nation, hit by acute shortage of food, fuel and medicines, is battling its worst economic crisis since its independence.
The problem has been aggravated as President Gotabaya Rajapaksa delayed in seeking assistance from the IMF even as foreign exchange reserves continued to fall.
“The delay in IMF assistance and the much required debt restructuring exercise has led to unprecedented shortage of food, fuel and medicines,” an analyst said.
An experienced Wickremesinghe, who has held the position of PM five times earlier, is also the finance minister of the bankrupt country.
He has warned that the next couple of months will be tough and that citizens must be ready to make some sacrifices. “He has the goodwill of the people and importantly his communication with his people is clear. He has not minced words and has not promised the moon,” the analyst said.
Meanwhile, Kanchana Wijesekera, Sri Lanka’s Energy Minister has met Central Bank Governor Nandalal Weerasinghe to discuss availability of foreign exchange required to import oil for June.
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