Sri Lanka asks IMF for rapid financial assistance amid the crisis

Sri Lanka has requested the International Monetary Fund (IMF) for rapid financial assistance amid the economic crisis. Sri Lanka’s finance minister said on Tuesday that the IMF could consider the request for rapid aid to debt-burdened Sri Lanka.

A delegation headed by Sri Lanka’s Finance Minister Ali Sabry started formal talks with the IMF in Washington on Monday on this matter. The government hopes that financial assistance can help the country to top up its reserves and attract bridge financing to pay for essential imports of fuel, food, and medicines.

Shamir Zavahir, Head of Reforms & Coordinating Secretary at the Ministry of Justice, said on Twitter that Sri Lanka asked for a loan under the rapid financial instrument (RFI) window to mitigate the current supply chain issues. Reportedly, the IMF said Sri Lanka’s request does not meet their criteria. However, India subsequently made representations on an RFI for Sri Lanka. Zavahir further said on Twitter, “IMF may consider this request due to the unique circumstances.” Zavahir claimed that India will fully support the deliberations of Sri Lanka with the IMF.

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According to media reports, Sri Lanka is seeking $3 billion in the coming months from multiple sources including the IMF, the World Bank and India because of the current economic crisis.  India and China have already extended billions of dollars in financial support to Sri Lanka.

Protests in Sri Lanka

Street protests erupted against President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa, because of the rising prices of fuel, food, and medicines. The economic crisis has led to huge protests with demands for the resignation of the prime minister and the president. Recently, the entire Sri Lankan cabinet resigned due to massive protests.

Sri Lanka was in a deep economic crisis when the Covid-19 pandemic hit in 2020. The Sri Lankan government imposed a broad import ban in March 2020 to save foreign currency. However, it is now facing record inflation.