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Sri Lanka seeks IMF’s bailout agreement to curb economic crisis

In a bid to stop the downward spiral pulling Sri Lanka into the worst economic crisis in seven decades, an International Monetary Fund (IMF) delegation is expected in the island country on Monday to discuss a loan program.

It has become a common thing in Sri Lanka to see kilometres-long queues of tired drivers who have been waiting for hours for petrol. Ballooning prices, thawing food availability and fuel shortages have made living in the country much more difficult.

In a Friday statement, Prime Minister Ranil Wickremesinghe’s office did not hide the fact that as many as 5 million Sri Lankans could be directly impacted by food shortages in the coming months.

To alleviate the hardships of Sri Lankan citizens, a team from the IMF will hold talks with government officials with a view to finalising a bailout agreement during their 10-day visit. Still, the IMF won’t solve problems immediately, experts warn.

“The IMF programme will provide access to other financing options. That would be the main way that we would get any help. But the IMF has already said they are mainly considering the debt restructuring process to provide the assistance. So, the talks with be starting next week. But in my view it will be a slightly slow process for us to get IMF money,” says Dhananath Fernando of think thank Advocata Institute.

Sri Lanka has been urgently searching for foreign exchange to pay for desperately needed fuel imports. Time is running short as the country’s existing stock of petrol and diesel is dwindling to a trickle and about to run out in a matter of days. The Sri Lankan administration has already undertaken hasty measures to maintain its national labour force’s productivity by ordering public sector employees to go home office for a fortnight due to the fuel shortage. This was preceded by the approval of a four-day work week for public sector workers earlier this week.

So far the UN has outlined a plan to raise USD 47 million to provide assistance to 1.7 million Sri Lankans worst hit by the crisis over the next four months.

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