Sri Lanka seeks emergency financial assistance from IMF

The International Monetary Fund (IMF) says it has received a request for emergency financial assistance from the Sri Lankan authorities to fight the COVID-19 epidemic.

This was revealed by the Director of the Communications Department of the International Monetary Fund, Gerry Rice responding to questions during a press briefing on Thursday (11).

He was asked about Sri Lanka’s planned $1.5 billion currency swap with China and the fact it’s portrayed as a way of Sri Lanka is resistant to IMF programs. 

“On Sri Lanka, just a reminder, the extended Fund program with the IMF was approved in 2016. That expired last year, June 2020.” 

“We did receive a request from the Sri Lankan authorities for emergency financial support to help fight the COVID pandemic,” the IMF spokesman said.

He stated that the assessment of that support has taken longer than for other countries due to “Sri Lanka’s daunting economic challenges and high public debt.” 

Mr. Rice said they have sought, but not reached understanding, on how to fulfill the key requirements for what could be a rapid financing instrument which would include policies to continue ensuring debt sustainability to address the balance of payment challenges including from the COVID‑19 impact on tourism and to preserve international reserves. 

“Indeed, Sri Lanka has relied on important restrictions since last year and recently introduced additional measures such as a requirement to convert 25 percent of export proceeds. We continue to closely monitor these economic policy financial developments in Sri Lanka including the recent agreement on a swap line with the People’s Bank of China,” he said.