'Default' Sri Lanka Negotiates with IMF from 19th to 24th

On the 14th (local time), vehicles and motorcycles lined up at a gas station in Colombo, the capital of Sri Lanka, to buy fuel. Photo by Yonhap News

[Asia Economy Reporter Buaeri] Sri Lanka will begin official negotiations with the International Monetary Fund (IMF) for bailout funding starting from the 19th for six days.

According to local media on the 18th, the negotiation team led by Ali Sabri, Sri Lanka's Minister of Finance, departed for the United States the previous day and will hold talks with the IMF from the 19th to the 24th.

Sri Lanka hopes to secure approximately 4 billion dollars (about 4.9 trillion won) in bailout funds through this negotiation.

In addition to the IMF, Sri Lanka is striving to raise 1 billion dollars (about 1.2 trillion won) from the World Bank (WB) and the Asian Development Bank (ADB).

Until funds are received from international organizations, Sri Lanka plans to rely on assistance from allied countries such as India and China.

As of the end of last month, Sri Lanka's foreign currency reserves stood at only 1.93 billion dollars (about 2.4 trillion won).

Global financial firms like J.P. Morgan estimate that Sri Lanka's external debt to be repaid this year amounts to 7 billion dollars (about 8.6 trillion won).

The Sri Lankan economy, heavily dependent on the tourism industry, has faced setbacks due to the 2019 Easter terror attacks, the COVID-19 pandemic, and the Ukraine war.

Moreover, the worst economic crisis occurred due to a combination of expanding external debt, excessive tax cuts, and failed fiscal policies such as over-issuance of domestic currency.

With foreign currency reserves depleted, shortages of essentials such as oil, medicine, paper, and food have occurred, prices have surged daily, and long lines formed at gas stations to buy fuel. Protests demanding the government's resignation erupted in many places.

The Sri Lankan government declared a temporary default, postponing repayment of external debt amounting to 51 billion dollars (about 62.9 trillion won) until bailout funds are received from the IMF earlier this month.

This content was produced with the assistance of AI translation services.