Sri Lanka faces “solvency” issues because of risks stemming from unsustainable debt levels that jeopardise the nation’s economy, the International Monetary Fund has said.
“Based on staff analysis, the fiscal consolidation necessary to bring debt down to safe levels would require excessive adjustment over the coming years, pointing to a clear solvency problem,” the IMF said in its Article IV consultation report, released in Washington on Friday.
The full report provides further analysis of the South Asian island nation’s debt and finances. A summary of the document released earlier this month said Sri Lanka faced unsustainable debt levels and needed a “credible and coherent” strategy to restore stability.
The fiscal consolidation necessary to bring debt down to safe levels would require excessive adjustment over the coming years, pointing to a clear solvency problem
IMF
The country’s “debt overhang”, along with persistent fiscal and balance-of-payments shortfalls, “will constrain growth and jeopardise macroeconomic stability in both the near and medium term”, the report said.
“Rollover risk is very high,” the IMF said. “[Foreign] debt service needs of $7 billion each year will require access to very large amounts of external financing at concessional rates and long maturities, sustained over many years.”
Since the IMF board considered the staff report in late February, a surge in oil prices and the loss of tourists because of the war in Ukraine exacerbated its foreign exchange crisis, forcing the government of President Gotabaya Rajapaksa to seek IMF aid.
Negotiations on a possible aid package are expected to start in April, when Finance Minister Basil Rajapaksa, a brother of the president, travels to Washington.
The spiralling crisis has also led the country to raise interest rates, devalue the local currency and curb non-essential imports.
Sri Lanka has about $2bn of reserves against $3.9bn of foreign-currency debt due for the remainder of 2022, Bloomberg calculations based on central bank data show. This includes $1bn of sovereign bonds maturing in July.
The Central Bank of Sri Lanka stands ready for closer engagement with the IMF, working jointly with the government “in order to ensure that the benefits of such an engagement outweigh any costs associated with the same, from the perspective of the general public, and the business and investor community”, the monetary authority said on Saturday.
Sri Lanka has to be “prepared to manage the negatives”, central bank governor Ajith Nivard Cabraal said on Thursday, referring to entering an IMF programme. He did not elaborate.
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EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich 1
Kimmich (27')
Real Madrid 2
Marcelo (43'), Asensio (56')
FIXTURES
New Zealand v France, second Test
Saturday, 12.35pm (UAE)
Auckland, New Zealand
South Africa v Wales
Sunday, 12.40am (UAE), San Juan, Argentina
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Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Greatest of All Time
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Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
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Friday, November 1 – Oman v UAE
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Result
6.30pm: Al Maktoum Challenge Round-3 – Group 1 (PA) $65,000 (Dirt) 2,000m; Winner: Brraq, Ryan Curatolo (jockey), Jean-Claude Pecout (trainer)
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9.25pm: Meydan Challenge – Listed Handicap (TB) $88,000 (T) 1,400m; Winner: Zainhom, Dane O’Neill, Musabah Al Muhairi
Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
