Sri Lanka finance minister meets top IMF official amid economic crisis

Changyong Rhee, Director of Asia and Pacific department at IMF, speaks during a session at
FILE PHOTO: Changyong Rhee, Director of Asia and Pacific department at the International Monetary Fund (IMF), speaks during a session at the "Advancing Asia: Investing for the Future" conference in New Delhi, India, March 12, 2016. REUTERS/Anindito Mukherjee

March 14, 2022

By Uditha Jayasinghe

COLOMBO (Reuters) – Sri Lanka’s finance minister held talks with a top International Monetary Fund (IMF) official on Monday, two sources said, as the island nation seeks help to deal with its plunging reserves, a sliding currency and surging inflation.

IMF Asia and Pacific Department Director Changyong Rhee met Finance Minister Basil Rajapaksa and Treasury Secretary S.R. Atygalle, two finance ministry officials told Reuters.

Sri Lanka is expected to start formal negotiations with the IMF in April on a possible programme that could boost reserves and put growth on a sustainable path.

In Monday’s talks, officials discussed details of the IMF’s latest review of the economy and the assessments outlined by IMF executive directors at an IMF board meeting in late February.

Rhee meets Sri Lankan President Gotabaya Rajapaksa on Tuesday.

“The talks were wide ranging and covered key challenges the economy is facing,” said one of the ministry officials, asking not to be named given the sensitivity of the talks.

“Right now, the focus is on how Sri Lanka can get IMF support. Talks on specific proposals will come later,” the official added, adding that Rajapaksa would brief the cabinet about the talks at a weekly meeting on Monday evening.

Sri Lanka has been hit by a dollar drought with reserves dropping to $2.31 billion in February. The country is struggling to pay for critical imports including fuel, food and medicines.

Chronic shortages have hit Sri Lankans hard with rolling power cuts, long lines at pumps and record levels of inflation.

Last week the Sri Lankan rupee fell 30% after the government allowed the currency to free-float, driving prices even higher.

(Reporting by Uditha Jayasinghe; Editing by Alasdair Pal and Edmund Blair)