COLOMBO — The
International Monetary Fund (IMF) said on Wednesday that it has asked cash-strapped Sri Lanka to
“restructure” its huge foreign debt before a bailout program could be finalized
as anti-government protests escalated across the island.
اضافة اعلان
Sri Lanka opened talks with the IMF in Washington
this week after announcing its first-ever default on external borrowings.
The South Asia country is in the grip of its worst
economic crisis since independence in 1948 and has been rocked by a wave of
protests over food and fuel shortages.
“When the IMF determines that a country’s debt is
not sustainable, the country needs to take steps to restore debt sustainability
prior to IMF lending,” the Fund’s country director Masahiro Nozaki said in a
statement.
“Approval of an IMF-supported program for Sri Lanka
would require adequate assurances that debt sustainability will be restored.”
The IMF said talks with Sri Lanka were still at an
“early stage,” but it was “very concerned” about the economic situation and the
hardships suffered by people, especially the poor and vulnerable.
Earlier this year, the IMF warned Sri Lanka’s
approximately $51 billion foreign debt was unsustainable.
Colombo’s existing debt also means the country
cannot apply for emergency financing, the IMF said.
Sources in the country’s finance ministry have made
it clear that debt restructuring will require creditors to accept a “haircut”
-- a reduction in the value of their assets -- or agree to longer repayment
periods.
Nearly two weeks ago, the government nearly doubled
key interest rates and allowed the currency to depreciate faster, hoping the
move would encourage foreign currency inflows.
On Monday,
President Gotabaya Rajapaksa conceded
that Sri Lanka should have gone to the IMF “much earlier”.
The country is short of dollars to finance even the
important essentials, including food, fuel and medicines. Widespread shortages
have sparked nationwide protests that turned violent on Tuesday.
One man was shot
dead and 29 others were wounded in clashes in a central town, while tens of
thousands continued demonstrations outside the president’s office in Colombo
demanding his resignation.
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