Sri Lanka says talks with IMF start on 'positive note'

By Riyaz ul Khaliq

ISTANBUL (AA) – Sri Lanka on Tuesday said negotiations for urgent financial assistance from the International Monetary Fund (IMF) have started "on a positive note."

Sri Lanka’s Finance Minister Ali Sabry led delegation-level talks with the global lender in Washington on Monday for a program to help the debt-ridden country pay for imports of food, medicines, and fuel.

Shamir Zavahir, aide to the finance minister, said on Twitter that Sabry asked for a loan under the Rapid Financial Instrument "to mitigate the current supply chain issues" but the IMF was initially not inclined to grant the request.

“However, India subsequently made representations on an RFI for as well and the IMF may consider this request due to the unique circumstances,” he said.

“In any event, IMF appears to be positive towards granting an Extended Fund Facility (EFF). Ideally if this can be expedited, it can help stabilize things in the short term till long-term solutions kick in.”

Sri Lanka has defaulted on all of its foreign debt as the island nation faces the worst economic crisis in decades that have sparked massive protests. Its foreign reserves dipped due to drastic drop in tourism activity during the coronavirus pandemic.

The government is also having negotiations with China and India for a possible economic lifeline to mitigate the pressure.

Beijing has decided to provide emergency humanitarian assistance to Colombo, said a spokesperson for the China International Development Cooperation Agency, according to state media.