IMF tightens grip over debt-ridden Lanka

Advertisement

The island nation has been gripped by an economic crisis, considered the worst since the country gained independence in 1948….reports Asian Lite News

International Monetary Fund (IMF) official on Tuesday advised Sri Lanka to tighten its monetary policy, raise taxes and adopt flexible exchange rates to overcome its debt crisis, according to a media report.

“We’ve had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and a couple of days before,” Xinhua quoted Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, as saying during an online event.

“The requirement for fund lending will be progress toward debt sustainability. Monetary policy has to be tightened to keep inflation in check. We see a need for flexible exchange rates,” she added.

However, the IMF official refrained from commenting on the value of any IMF package, or an estimated time needed to come into an agreement with the island nation.

This comes as Sri Lankan Finance Minister Ali Sabry and Governor of the Central Bank Nandalal Weerasinghe recently concluded a visit to the IMF to discuss financial assistance for the country.

The island nation has been gripped by an economic crisis, considered the worst since the country gained independence in 1948. Due to energy shortages, some parts of Sri Lanka have rolling blackouts. Sri Lanka’s foreign debt is estimated at USD 51 billion.

Sri Lanka appears to be on the edge of a “humanitarian crisis”, according to the United Nations Development Programme, as its financial troubles grow, with rising food prices, and the country’s coffers have run dry.

According to World Bank estimates, five lakh people in Sri Lanka have fallen below the poverty line since the onset of the crisis. (ANI)

ALSO READ: Crisis-hit Lanka seeks foreign investments