Sri Lanka reaches out to IMF for help as FM Rajapaksa departs for New Delhi to sign fresh bailout package with India

On Tuesday, Finance Minister Basil Rajapaksa gave the nod to seek assistance from the International Monetary Fund

Sri Lankan government will seek financial support from the IMF, softening its resistance against the international lender as it desperately tries to salvage the country’s beleaguered economy that is currently reeling under a severe foreign exchange crisis.

On Tuesday, Finance Minister Basil Rajapaksa gave the nod to seek assistance from the International Monetary Fund (IMF).

“The Cabinet approval has been given to the Finance Minister to go ahead and discuss with the IMF”, Cabinet spokesman Ramesh Pathirana told reporters.

Sri Lanka's economy was facing "mounting challenges" with public debt reaching "unsustainable levels", the IMF has said earlier this month, calling for urgent reforms in the island nation's economy as it is facing the worst economic crisis.

Sri Lanka is currently reeling under a severe foreign exchange crisis with falling reserves and the government is unable to foot the bill for essential imports.

“Sri Lanka has been hit hard by COVID-19. On the eve of the pandemic, the country was highly vulnerable to external shocks owing to inadequate external buffers and high risks to public debt sustainability, exacerbated by the Easter Sunday terrorist attacks in 2019 and major policy changes including large tax cuts at late 2019," the IMF said in a release after global lender's executive board’s consultative meeting held on February 25.