IMF closely monitoring situation in Sri Lanka; hopes for early resolution of crisis to allow bailout

Colombo, July 10: The International Monetary Fund (IMF) is hoping for a resolution to Sri Lanka's political turmoil that will allow a resumption of talks for a bailout package after a violent day of protests.

"We are closely monitoring the ongoing developments in Sri Lanka," Peter Breuer, IMF Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, IMF Mission Chief for Sri Lanka said in a statement on Sunday.

"We hope to resolve the current situation that will allow for the resumption of our dialogue on an IMF-supported programme, while we plan to continue technical discussions with our counterparts in the Ministry of Finance and Central Bank of Sri Lanka," Economy Next reported on Sunday.

The IMF has concluded a round of policy-level talks with Prime Minister Wickremesinghe who is also Finance Minister and there were some financial issues to be resolved. At the same time, Central Bank Governor Nandalal Weerasinghe said the monetary programme targets were wrapped up.

An interim budget was also due in July or August.

Sri Lanka is going through the worst economic crisis since its independence from Britain in 1948 and needs to obtain at least USD 4 billion to tide over the acute shortage in foreign exchange reserves.

On July 9, protestors overran the Presidential palace, and his office and also torched Prime Minister Wickremesinghe's private residence after a police special task force squad suddenly attacked a group of journalists covering the protests.

Speaker Mahinda Yapa Abeywardena told reporters on Saturday night that President Rajapaksa had agreed to step down on July 13. Prime Minister Wickremesinghe said he would resign as soon as an all-party government was ready to take over.

Sri Lanka's inflation topped 50 per cent in June after two years of money printing and an attempted float botched with a surrender requirement which sent the rupee sliding to 360 to the US dollar from 200.