প্রকাশ: 30/06/2022
The International
Monetary Fund reported constructive talks with Sri Lankan authorities on
Thursday, raising hopes it could soon grant preliminary approval for a credit
facility to alleviate a crisis in which the country is struggling to pay for
imports.
"The discussions will continue virtually with a view to
reaching a staff-level agreement on the EFF arrangement in the near term,"
IMF said, referring to the credit arrangement, called an extended fund
facility.
Staff-level agreement must precede final approval by the
IMF's executive board, but so too must cooperation from Sri Lanka's creditors,
which is not expected to come quickly.
"Because public debt is assessed as unsustainable,
Executive Board approval would require adequate financing assurances from Sri
Lanka's creditors that debt sustainability will be restored," the IMF
said.
Analysts say debt restructuring would be a protracted
process, even after IMF staff-level agreement.
The financial crisis is the worst in decades for the island
of 22 million people, which has defaulted on some foreign debt.
With little money available for imports, the country has
dangerously low fuel reserves. The government on Tuesday restricted allocations
to essential services, such as trains, buses and the health sector, for two
weeks.
The IMF said the high fiscal deficit had to be reduced while
ensuring adequate protection for the poor and vulnerable. Since revenue was
weak, far-reaching tax reforms were urgently needed to achieve these
objectives.
"The statement indicates staff-level agreement will
come in very soon and could activate bilateral and multilateral lenders to look
at Sri Lanka positively," said Udeeshan Jonas, chief strategist at equity
research firm CAL.
"IMF support will help Sri Lanka get commitments from
creditors. The government has made a lot of progress on things which are
generally supposed to be in favor of an IMF staff level agreement," he added.
The IMF said other challenges that needed addressing
included containing rising inflation, attending to severe balance of payments
pressures, reducing the country's vulnerability to corruption, and undertaking
growth-enhancing reforms.
- Reuters
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