Sri Lanka to Begin Main Bailout Talks with IMF from the 18th

by Keum Boryeong

Published 14 Apr.2022 17:59(KST)

"Expecting Emergency Financial Aid to Come Out in a Week"

On the 12th (local time), a long line of three-wheeled vehicles waiting to refuel formed in front of a gas station in downtown Colombo, the capital of Sri Lanka. The Sri Lankan government declared a default on the same day, stating in a press release that it would temporarily suspend repayment of its external debt. (Photo by Yonhap News)

[Asia Economy Reporter Geum Bo-ryeong] Sri Lanka, facing a national default crisis, will enter into formal bailout negotiations with the International Monetary Fund (IMF) starting on the 18th.

Ali Sabry, Sri Lanka's Minister of Finance, said in an interview with Bloomberg TV on the 14th, "Negotiations with the IMF will begin on the 18th in Washington, D.C.," adding, "If things proceed smoothly, we expect emergency bailout funds within a week."

Minister Sabry stated that Sri Lanka needs $3 billion to $4 billion (approximately 3.7 trillion to 4.9 trillion KRW) to overcome its worst economic crisis. He added that these funds will be sourced not only from the IMF but also from other banks and countries.

The Sri Lankan government has also requested emergency support from countries including India and China.

Highly dependent on the tourism industry, Sri Lanka's economy was severely hit by the 2019 Easter bombings, the COVID-19 pandemic, and the Ukraine war.

As of the end of last month, the Sri Lankan government's foreign currency reserves stood at $1.93 billion (2.4 trillion KRW), but the external debt due this year amounts to $7 billion (8.6 trillion KRW), putting the country at risk of default.

On the 12th, the Sri Lankan government declared a temporary default. It also announced a temporary suspension of external debt repayments until bailout negotiations with the IMF are completed and a comprehensive debt restructuring plan is prepared.