IMF delegation to visit Sri Lanka by August end: Central Bank Governor

Sri Lanka is in the midst of an unprecedented economic crisis that has led to severe shortages of fuel and other essentials

Governor of Sri Lankan Central Bank Nandalal Weerasinghe speaks during a media briefing in Colombo, Sri Lanka. | Photo Credit: AP

The Sri Lankan government's negotiations with the IMF for a bailout package have made "good progress," the Central Bank Governor said on Thursday, indicating that a top delegation of the Washington-based lender is expected to arrive here at the end of this month to finalise a staff-level agreement.

Sri Lanka is in the midst of an unprecedented economic crisis that has led to severe shortages of fuel and other essentials.

The island nation of 22 million also witnessed a major political churn in recent times following massive mass protests that forced former President Gotabaya Rajapaksa to flee the country and resign from his post.

"The IMF programme is making a good progress, and an IMF mission is planning to visit Sri Lanka towards the end of this month to reach a staff-level agreement on a policy package,” news portal newsfirst.lk quoted Sri Lanka's Central Bank Governor Nandalal Weerasinghe as saying.

Mr. Weerasinghe said that after Sri Lanka reached a staff-level agreement with the IMF, the country will have to engage with its creditors on debt restructuring, the report said.

"We will be reaching out to the bilateral and commercial creditors once we reach the overall debt targets and the staff-level agreement," he said.

In July, Mr. Rajapaksa's ally and Sri Lanka's newly-appointed president Ranil Wickremesinghe said he had aimed to reach an agreement with the IMF by early August, but the political turmoil in the country forced the international lender to push back the agreement by a month.

Mr. Wickremesinghe was elected Sri Lanka's eighth president last month after his predecessor Rajapaksa fled to Singapore after irate protesters stormed his official residence and occupied key government buildings.

On July 9, in remarkable scenes of a country in meltdown, anti-government protesters also set Mr. Wickremesinghe's private residence at Cambridge Place here on fire.

Sri Lanka needs about $5 billion in the next six months to cover basic necessities for its citizens, who have been struggling with long queues, worsening shortages of essentials and frequent power cuts.

The island nation owes $51 billion in foreign debt, of which $28 billion must be paid by 2027.

The country's inflation surged to 60.8% in July, up from 54.6% in June, the crisis-hit country's statistics department Colombo Consumer Price Index has said, as food and fuel remained scarce amid dwindling foreign exchange reserves.