An IMF delegation will arrive in Sri Lanka on Monday to discuss a rescue proposal, but time is running out for a country that is just days away from running out of fuel and months away from receiving any relief funds.
Sri Lanka is in the midst of its biggest financial crisis since its 1948 independence, as decades of economic mismanagement and subsequent policy blunders, along with tourism and remittances hit by COVID-19, have reduced foreign reserves to historic lows.
In April, the 22-million-strong island country put a stop to payments on a $12 billion debt. The UN has warned that rising inflation, a falling currency, and persistent fuel, food, and medical shortages could lead to a humanitarian disaster.
But the crisis is already overwhelming for average Sri Lankans, like autorickshaw driver Mohammed Rahuman, 64, who was recently standing in line for gasoline for more than 16 hours.
Snaking lines kilometers long have formed outside most fuel pumps since last week. Schools in urban areas have closed and public workers have been asked to work from home for two weeks.
Bondholders expect the IMF visit to give clarity on how much debt Sri Lanka can repay and what haircuts investors may have to take.
Prime Minister Ranil Wickremesinghe said this month an IMF program is crucial to access bridge financing from sources such as the World Bank and Asian Development Bank.
Representatives from Sri Lanka’s financial and legal advisors, Lazard and Clifford Chance, are in Colombo.