United States backs Sri Lanka's new debt initiative

United States backs Sri Lanka’s new debt initiative: In a letter to Reuters, US Treasury Secretary Janet Yellen said that the US will assist in restructuring Sri Lanka‘s debt and provide funding guarantees to the island country in crisis.

Sri Lanka, which is trying to recover from the worst economic crisis in more than seven decades, and the International Monetary Fund (IMF) secured a tentative agreement last week for a roughly $2.9 billion loan.

In a letter released Tuesday, Yellen urged all creditors to engage fully in the discussions and restructuring, saying, “The United States, as a creditor, stands ready to join in a restructuring of Sri Lanka’s debt.”

She said the US Treasury would work with other US government agencies, the World Bank, and the Asian Development Bank to help Sri Lanka’s discussions with the IMF.

The United States would back the reorganization endeavor, according to earlier statements from the Sri Lankan administration.

The COVID-19 epidemic, which has wiped out Sri Lanka‘s main tourist business, and economic incompetence are to blame for the country’s financial problems, which are at their worst since it gained independence from Britain in 1948.

For months, Sri Lankans have struggled with severe shortages of gasoline and other necessities, which has sparked unprecedented demonstrations that have resulted in a change of government.

The problem reached a boiling point in July when Ranil Wickremesinghe succeeded the country’s outgoing president, Gotabaya Rajapaksa, who had accused of economic incompetence.

However, the seasoned politician has had difficulty stabilizing the economy, which has battered by rogue annual inflation that currently stands at about 65%.