The International Monetary Fund (IMF) team has concluded a “constructive and productive” discussion with the Sri Lankan authorities on economic policies and reforms to be supported by an IMF extended fund facility (EFF) arrangement.
“Significant progress was made, and discussions will continue virtually towards reaching a staff-level agreement on the EFF arrangement in the near term,” the IMF said.
The multilateral institution assured the nation that the bailout package would be devised to protect the poor and vulnerable while stepping up structural reforms to “address corruption vulnerabilities and unlock Sri Lanka’s growth potential.”
The island of 22 million people is facing its worst-ever economic crisis, leading to widespread food and fuel shortages and forcing it to default on foreign debt.
On Monday, the government restricted fuel supplies to private vehicle owners and some public sector units, leaving the island nation in a partial-lockdown-like situation. Hundreds of people, including health workers and bank employees, hit the streets on Wednesday, seeking an immediate normalization of the situation.
Prime Minister Ranil Wickremesinghe assured people of additional shipments of gasoline and diesel, but the relief would not come before mid-July.
“Even India is not sure about finding fuel…India told us even if you have dollars, you can’t buy fuel,” the prime minister said on Wednesday.
Sri Lanka owes $51 billion in foreign debt, and it suspended the repayment of $7 billion due in 2022, marking the first-ever default by the Indian Ocean Island.
Sri Lanka has planned a donor conference with Japan, China and India—its three prominent creditors, to secure loans before it finalizes a bailout package with the IMF worth approximately $3 billion.
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