IMF Says Sri Lanka should talk with China about the debt

IMF Says Sri Lanka should talk with China about the debt.

Sri Lanka should discuss this with its bilateral lender China. According to the International Monetary Fund (IMF). 

They also recommended that the island nation’s government apply for a funding loan from the Washington-based organization.

“China is a significant creditor, and Sri Lanka must aggressively work with it to restructure its debt, “In an interview with Reuters on Tuesday, Krishna Srinivasan, head of the IMF’s Asia and Pacific Department, said.

The 22 million-person island is presently experiencing its worst economic and political crisis in recent memory.

Following months of acute gasoline, food, and medical shortages, six-time prime minister Ranil Wickremesinghe was recently elected president after his predecessor was overthrown in a popular revolt.

Recently, the government decided to impose a 12-month import ban on petroleum.

According to statistics from the Institute of International Finance, the nation owes Beijing over $6.5 billion in finance, including loans from development banks and a central bank swap (IFF).

The second-largest economy in the world has made investments in infrastructure projects, including roads, ports, airports, and coal power plants. Additional bilateral creditors to Sri Lanka include Japan and India.

“To ensure that debt sustainability is restored, Sri Lanka must work with its creditors on a debt workout, both on a private and official bilateral basis, “Srinivasan stated that technical discussions on a new IMF program are currently taking place with representatives from the finance ministry and the central bank.

Requests for a response from Sri Lanka’s foreign ministry and central bank were not immediately fulfilled. Likewise, the Sri Lankan embassy of China did not answer right away.

The country of South Asia has asked the IMF for a rescue strategy to get through its most significant economic crisis since gaining independence in 1948. 

Srilanka is having trouble paying its $12 billion foreign debt with private creditors because it must import essential products. Earlier this year missed a bond payment.