The International Monetary Fund will initiate discussions with Sri Lankan authorities on a possible loan program in the coming days, IMF spokesperson Gerry Rice said on Thursday (Mar 31), as the Asian country seeks to stave off a severe economic crisis.

Rice said the discussions would continue during the visit of Sri Lankan Finance Minister Basil Rajapaksa in Washington for the spring meetings of the IMF and World Bank next month.

A 70 per cent drop in foreign exchange reserves since January 2020 has left Sri Lanka struggling to pay for essential imports, including food and fuel, leading to growing unrest and even military deployments at gasoline stations.

“The Sri Lankan authorities have expressed interest in an IMF-supported financial programme,” Rice told a regular IMF briefing. “We plan to initiate those program discussions with the Sri Lankan authorities ... pretty much in the coming days.”

Rice said the IMF would update its forecast for Sri Lanka when it releases its new World Economic Outlook next month, but gave no further details.

He confirmed that Sri Lankan finance minister would visit Washington next month for talks with IMF officials, as reported by Reuters last week.

Sri Lanka - which must pay about USD 4 billion in debt this year - will also seek World Bank assistance after it enters into an IMF program, Reuters reported, citing two sources familiar with the matter.

--Agencies