Crisis-hit Sri Lanka pleads for swift deal with creditors

Crisis-hit Sri Lanka pleads for swift deal with creditors

COLOMBO: Crisis-hit Sri Lanka pleaded for a swift agreement with its international creditors to clear the way for a desperately needed US $2.9 billion bailout from the International Monetary Fund.

The International Monetary Fund needs to ratify this month's staff-level agreement on the tentative US $2.9 billion lifeline conditional on Colombo striking a deal with creditors to restructure its debt.

After running out of foreign exchange to fund most essential imports, Sri Lanka defaulted on its external debt in mid-April. China is China's largest single creditor.

The unreliable foreign exchange crisis led to the fall of then-president Gotabaya Rajapaksa in mid-July after months of street protests.

His successor Ranil Wickremesinghe has taken a tough line against protesters, and has also loosened some of the shortages by implementing fuel rationing.

He has secured an agreement with the World Bank to divert funds for poverty relief to finance the imports of life-saving medicines and equipment.

The country's 22 million people have suffered from galloping inflation, prolonged blackouts and acute shortages of food, fuel and medicines since late last year.

Sri Lanka's central bank asked for financing assurances - code for a reduction of debt, but did not say how much was expected, in its first virtual meeting with creditors on Friday.

A presentation to creditors showed that the Central Bank of Sri Lanka expects to receive assurances from public and private partners by mid-November.

The bank hopes final IMF approval for the bailout can be obtained by mid-December, and urged creditors to organise themselves into an ad hoc group to negotiate collectively.

The creditor response was not immediately clear after the virtual meeting.