Sri Lanka to start next round of talks with creditors in April

A group of supporters of President Ranil Wickremesinghe celebrates while he addresses the nation, after the International Monetary Fund's executive board approved a $3 billion loan, in outskirts of Colombo, Sri Lanka March 21, 2023. REUTERS/Dinuka Liyanawatte

COLOMBO (Reuters) - Sri Lanka will kick off the next round of talks with creditors in the third week of April, President Ranil Wickremesinghe said on Wednesday, adding that the debt-stricken nation has started to receive funds from the International Monetary Fund.

The IMF has released the first tranche of about $330 million, part of a nearly $3 billion bailout approved by it on Monday, Wickremesinghe told parliament.

"This will create opportunities for low-interest credit, restore foreign investors' confidence and lay the foundation for a strong new economy," he said.

The IMF bailout is expected to catalyse additional support to the tune of $3.75 billion from the likes of the World Bank, the Asian Development Bank and other lenders. It also clears the way for Sri Lanka to restructure a substantial part of its $84 billion worth total public debt.

(GRAPHIC: The long wait for bailout approval

Sri Lankan officials will start the next round of talks with bondholders and bilateral creditors in the third week of April, Wickremesinghe said, adding that a fully transparent process will be followed.

Sri Lanka also aims to reduce inflation to a single digit by mid-2023 and later to 4%-6%, Wickremesinghe said. The country's National Consumer Price Index rose an annual 53.6% in February.

This was the 17th IMF bailout for Sri Lanka and the third since the country's decades-long civil war ended in 2009.

Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the beginning of last year, tipping the island nation into its worst financial crisis in seven decades.

Unlike previous bailouts, which were mainly used to bolster foreign exchange reserves, the funds from the current programme can also be used for government spending, senior IMF official Masahiro Nozaki said on Tuesday.

(Reporting by Uditha Jayasinghe; Editing by Clarence Fernandez and Raju Gopalakrishnan)

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