Can broke Sri Lanka avoid a ‘disorderly default’ and reach an IMF deal in time?

Time is running out, but new PM Ranil Wickremesinghe is struggling to forge a unity government as strongman President Gotabaya Rajapaksa clings to power

Colombo must also restructure debt with the likes of China, India and Japan, and set ‘a credible macroeconomic strategy’ amid widespread hunger and election pleas

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An anti-government demonstrator protests near the president’s office in Colombo. Photo: AFP

Published: 7:06pm, 16 May 2022Updated: 2:19am, 17 May 2022

Amid ongoing political turmoil over the economic crisis engulfing Sri Lanka, the International Monetary Fund (IMF) has been holding “technical talks” with government officials about a rescue plan.

The IMF says the aim is to ensure the two sides are “fully prepared” to begin official negotiations on a bailout package as soon as the situation stabilises.

On Monday, Sri Lanka’s new Prime Minister Ranil Wickremesinghe, a veteran opposition lawmaker and former premier, appeared to make progress in forging a unity government after winning support from the opposition.

Opposition politicians had earlier hoped to boot out strongman President Gotabaya Rajapaksa, whose populist economic management is blamed for the country’s financial mess and who is stubbornly clinging to power.

In the latest development, the main opposition SJB party dropped its demands that Rajapaksa step down. It declined to join a unity government helmed by Wickremesinghe but said it would “unconditionally support the positive efforts to revive the economy”.

02:12

Sri Lanka names new prime minister in hopes of addressing growing crisis

Once the political uncertainty ends – and that may be some time – working out an IMF package will take as long as six months, government officials have said.