IMF to consider Sri Lanka’s request for financial aid

 

Ministry of finance in Sri Lanka on Tuesday disclosed that the International Monetary Fund would consider providing quick financial assistance to the debt-burdened country.

A delegation headed by Sri Lanka’s Finance Minister, Ali Sabry, kicked off formal talks with the IMF in Washington on Monday for a programme the government hoped would help top up its reserves.

It also hoped it would attract financing to pay for essential imports of fuel, food, and medicines.

An aide to Sabry, Shamir Zavahir, said on Twitter that Sri Lanka asked for a loan under the rapid financial instrument window, meant for countries needing urgent balance-of-payment support.

However, the global lender was initially not inclined to grant the request.

“The IMF has subsequently informed Minister Sabry that India had also made representations on behalf of Sri Lanka for an RFI.

“It had been communicated that IMF will consider the special request made despite it being outside of the standard circumstances for the issuance of an RFI,” Sri Lanka’s finance ministry said in a statement.

Sri Lanka’s sovereign dollar-denominated bonds came under pressure again on Tuesday, with longer-dated issues falling as much as 1.4 cents in the dollar to trade at deeply distressed levels of just over 40 cents, Tradeweb data showed.

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The country’s devastating financial crisis came as the effects of COVID-19 exacerbated mismanaged government finances and as rising prices of fuel sapped foreign reserves.

Fuel, power, food, and medicines had been running low for weeks.