A team of IMF officials are scheduled to visit Colombo from December 7 to 20 for Sri Lanka’s annual economic
A team of IMF officials are scheduled to visit Colombo from December 7 to 20 for Sri Lanka’s annual economic assessment.
The assessment is conducted under the IMF’s Article 4, which allows an IMF team to assess national economic and fiscal needs. The meeting will likely consider the looming foreign exchange crisis in the country. To sustain economic activity during COVID-19 lockdowns in 2020, the Sri Lanka government ran down its foreign reserves to critically low levels.
Colombo’s banks have not requested any financial assistance, but the IMF is ready to discuss the needs of the government. The government is proceeding with debt restructuring and has not requested any funds as it is hesitant that the Sri Lankan rupee value will decrease, and banks will charge higher interest rates
Expect Colombo to look for alternative options to secure financial assistance from China and India. The Finance Ministers of India and Sri Lanka will likely secure a $500 million credit line and new investments in the region for a seamless repayment. Having been an integral part of China’s Belt and Road initiative, Sri Lanka might persuade China for further infrastructural investments in the region.