Sri Lanka’s economy collapses and asks IMF for help to overcome crisis

Sri Lankan Prime Minister Ranil Wickremesinghe told parliament Wednesday (June 22) that Sri Lanka’s economy has completely collapsed. An agreement with the International Monetary Fund (IMF) is the only way to save Sri Lanka from the crisis.

“We are now facing a situation that is worse than shortages of fuel, gas, electricity, and food, where we cannot buy imported fuel and even have no cash. Because government petroleum companies have a lot of debt. We are seeing signs of a possible collapse of the economy to its lowest point,”

said Ranil Wickremesinghe.

The statement comes at a time when the Sri Lankan government is negotiating a new loan agreement with the IMF to revive the country’s economy. Sri Lanka will need $6 billion in the coming months to replenish the reserve fund, pay down debt on high-value imported goods and ensure currency stability.

“Sri Lanka has completed preliminary discussions with the IMF and exchanged views on Public Finance, Debt Sustainability, Banking, and Social Welfare. We intend to agree on the officer level with the IMF by the end of July,” an official said.

Sri Lanka also plans to meet with its allies to discuss credit support. These include India, Japan and China.

Last Tuesday, Hamilton Reserve Bank, which holds over $250 million worth of Sri Lankan government bonds, filed a law suit in New York State court. The bonds bear interest at 5.875% and mature on July 25.

Sri Lanka defaulted on bond payments in May after the 30-day grace period for the two bonds expired. It is the first time Sri Lanka has defaulted on its debt since gaining independence from the United Kingdom in 1948.

Leave a Reply

Change Language
%d bloggers like this: