Prime Minister Ranil Wickremesinghe says a staff-level agreement with the International Monetary Fund (IMF) and the programme for a bailout package would be finalized by the end of July.
The first in-person talks with the IMF on Sri Lanka’s bailout request commenced in Colombo on Monday (June 20) and are going on for 10 days. PM Wickremesinghe met with the visiting IMF delegates who arrived on the island for talks on a bailout programme as Sri Lanka is battling its worst financial crisis since independence in 1948.
“The only safe option before us now is to hold discussions with the International Monetary Fund. In fact, this is our only option. We must take this path,” he stressed, delivering a special statement in the parliament today (June 22).
He added that Sri Lanka has concluded the initial discussions with the IMF delegation and exchanged ideas on various sectors such as public finance, finance, debt sustainability, stability of the banking sector and the social security network.
PM Wickremesinghe also said the framework for Sri Lanka’s debt restructuring is expected to be finalized by the end of July following discussions with the financial and legal advisory firms Lazard Ltd. and Clifford Chance LLP.
“Representatives of Lazard and Clifford Chance are now in Sri Lanka to assist us in our debt restructuring efforts. The framework for debt repayment restructuring is being formulated.”
Sri Lanka hired the two firms in May to serve as financial and legal advisors on debt restructuring as the country seeks a bailout from the IMF.
Speaking further, the Premier said three high ranking officials of the Indian government are scheduled to arrive in Sri Lanka tomorrow (June 23) for discussions regarding the loans offered to the island nations in the future.
“We have sought more loans from India, but India cannot continue to lend us. We also need to formulate a system to pay off loans,” PM Wickremesinghe added.
According to him, a team of representatives from the U.S. Department of the Treasury is expected in Sri Lanka next Monday.
“We ensured that we created the background necessary for the immediate arrival of these three teams in Sri Lanka. We will conduct lengthy discussions with them. Their presence in the country will now allow us to hold meetings together with all three teams. It will only further assist us in expediting our programme.”
Speaking further, the Premier went on to point out that the Ceylon Petroleum Corporation is USD 700 million in debt and that no country or organisation in the world is willing to provide fuel to Sri Lanka as a result. “They are even reluctant to provide fuel for cash.”
According to the prime minister, Sri Lanka is currently in need of USD 550 million to meet its monthly fuel needs. “However, in the face of the economic crisis, we are experiencing difficulties in securing the necessary funds for this purpose. As a result of this, we will take steps to import the maximum fuel stocks possible based on our dollar income. Resolving the fuel shortages will take more time. Therefore I request you to economise when using fuel.”
PM Wickremesinghe also revealed that the government has also taken steps to import 100 000 MT of liquefied petroleum gas utilising a World Bank loan of USD 70 million and USD 20 million of the country’s own reserves. “We will be able to eliminate the gas shortage once we receive these LPG stocks.”
Speaking further, the Premier said Sri Lanka has plans to organise a credit aid conference which will be led by India, Japan and China – the main lending countries of the island nation.
Through the credit aid conference, we hope to arrive at a general consensus on the lending processes, he explained.
“However, there have been some conflicts and disagreements between us in the recent past. We are working towards resolving these and fostering friendly relations once again. Each country has different processes for granting loans.”
“If we receive the IMF seal of approval, the world will once again trust us. It will help us to secure loan assistance as well as low-interest loans from other countries in the world. We are also currently holding discussions with the World Bank, Asian Development Bank, the United States, other friendly nations and heads of state to secure interim short-term loans till we receive IMF support. We will be able to lay the foundation to ensure economic stability following the successful completion of these tasks. But this by no means will be the end. In fact, it will be the beginning of our journey. A new journey toward a stronger economy.