Sri Lanka in crisis needs support from international financial institutions
Sri Lanka’s Treasury Minister Sabri, who announced his resignation, said on the 7th that he should consider debt restructuring of the $ 1 billion government bond that will mature in July this year, and will support international financial institutions. He expressed the idea that he needed to ask.
The Sri Lankan economy is facing a crisis. Foreign currency reserves have plummeted, and the rupee has fallen sharply as the government is forced to repay huge debts. Analysts point out that government options are scarce.
According to JP Morgan, this year’s external debt repayments are $ 7 billion. In contrast, the current account is expected to be in the red of $ 3 billion.
“We have to consider how to pay $ 1 billion in government bonds, which will mature in July,” Sabri said, and said he needed to seek help from the International Monetary Fund (IMF).
The central bank will hold a monetary policy meeting on the 8th. Inflation is accelerating at the moment, with inflation reaching 18.7% in March. The central bank raised interest rates by 100 basis points (bp) in March to curb inflation, but is expected to raise it by another 300-400 bp.
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