IMF hopes for resolution of Sri Lanka crisis to resume bailout talks

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The International Monetary Fund (IMF) said it is hoping for a resolution to Sri Lanka’s political turmoil that will allow a resumption of talks for a bailout package after a violent day of protests.

Sri Lanka’s President Gotabaya Rajapaksa will resign on Wednesday after thousands of protesters stormed his official residence and secretariat on Saturday, an official said.

Protesters also set fire to Prime Minister Ranil Wickremesinghe’s private residence.

“We are closely monitoring the ongoing developments in Sri Lanka,” Peter Breuer, IMF Senior Mission Chief for Sri Lanka, and Masahiro Nozaki, IMF Mission Chief for Sri Lanka said in a statement on Sunday.

“We hope to resolve the current situation that will allow for the resumption of our dialogue on an IMF-supported programme, while we plan to continue technical discussions with our counterparts in the Ministry of Finance and Central Bank of Sri Lanka,”

Speaker Mahinda Yapa Abeywardena told reporters on Saturday night that President Rajapaksa had agreed to step down on July 13. Prime Minister Wickremesinghe said he would resign as soon as an all-party government was ready to take over.

Sri Lanka’s inflation topped 50 per cent in June after two years of money printing and an attempted float botched with a surrender requirement which sent the rupee sliding to 360 to the US dollar from 200.

“We are deeply concerned about the impact of the ongoing economic crisis on the people, particularly the poor and vulnerable groups, and reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies,” the IMF statement said.

The IMF will formally agree to a deal until re-structuring discussions with creditors are initiated but a staff-level deal was expected around August 2022.