Sri Lankan Prime Minister Ranil Wickremesinghe said on Tuesday that inflation in the country is expected to hit 60 percent, adding that talks for a bailout from the International Monetary Fund (IMF) will be tough as the country is bankrupt. complex. Sri Lanka is understood to have run out of dollars to buy fuel and plans to stop printing money to curb inflation.
It is reported that Sri Lanka is mired in the most serious economic crisis in more than 70 years. The country’s 22 million people have been short of oil, electricity, food and medicine for several months. In addition, the country’s Minister of Electricity and Energy Vijay Sekela said on July 3 local time that the country’s remaining gasoline reserves are only enough for one day, and the next batch of gasoline is expected to arrive in the country on July 22-23.
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In this regard, Wickremesinghe said that Sri Lanka will now reach a staff-level agreement with the IMF in August, which has been delayed from the earlier deadline of June.
It is understood that the IMF and the Sri Lankan government concluded negotiations on a $3 billion aid deal on June 30, but the two sides have yet to reach an agreement. According to reports, the IMF said in a statement on the same day that negotiations with the Sri Lankan government will continue to be held online with a view to reaching a working-level Extended Fund Facility (EFF) agreement, the purpose of which is to help those with existing countries with serious international payments imbalances.
The IMF also said it would provide support for the Sri Lankan government “to change structural imbalances over the longer term.”
Sri Lanka has high hopes for IMF assistance. On June 22, Wickremesinghe had said that the country’s economy had “completely collapsed” and that IMF assistance was the only option to avoid economic disaster in Sri Lanka.
It is reported that due to the severe shortage of crops and crude oil, Sri Lanka’s consumer price index (CPI) in June rose by 54.6% year-on-year, transportation prices soared by 128% month-on-month, and food prices soared by 80% month-on-month. Meanwhile, Sri Lanka’s central bank is expected to print more money this year than when output grows in 2021 amid a shrinking economy, which has also pushed up inflation.