Sri Lankan PM says economy has completely collapsed, will hold talks with IMF for additional credit

Sri Lanka’s economy has “completely collapsed” and an agreement with the International Monetary Fund is the only way to revival, Prime Minister Ranil Wickremesinghe told the parliament on Wednesday.

“We are now facing a far more serious situation beyond mere shortages of fuel, gas, electricity and food,” Wickremesinghe said, adding that the South Asian nation is unable to purchase imported fuel, even for cash, due to heavy debts owed by its petroleum corporation. “We are now seeing signs of a possible fall to rock bottom.”

The analysis comes as authorities hold talks with the Washington-based lender for an agreement for fresh funds to the bankrupt nation. Sri Lanka is in need of $6 billion in coming months to prop up its reserves, pay for ballooning import bills and stabilize its currency.

Sri Lanka has concluded the initial discussions with the IMF, and exchanged ideas on public finance, debt sustainability, banking sector as well as social security, Wickremesinghe said. “We intend to enter into an official level agreement with the IMF by the end of July,” he added.