Sri Lanka should tighten monetary policy, raise taxes and adopt flexible exchange rates to address its debt crisis, a senior International Monetary Fund (IMF) official said on Tuesday.
The country of 22 million people has requested a loan from the IMF as it struggles to pay for imports amid crushing debt and a sharp fall in foreign exchange reserves that have fueled rising inflation.
“We’ve had very good, fruitful, technical discussions on the preparation for talks with officials over the past weekend and a few days ago,” said Anne-Marie Gulde-Wulf, acting director of the IMF’s Asia and Pacific Department. An online news conference.
Sri Lanka’s Finance Minister Ali Sabri was in Washington last week to talk to the IMF, the World Bank, India and others about financial aid for his country, which suspended payments on part of its $51 billion in foreign debt. Have given.
Gulday-Wulf called on Sri Lanka for measures to increase tax revenues to meet critical spending needs, saying “the need for fund lending will be progress towards debt stability.”
“Monetary policy has to be tightened to keep inflation under control,” he said. “We see a need for flexible exchange rates.”
Gulde-Wolf did not respond to a question on the total value of any IMF package, nor on the estimated timing of the conclusion of talks with Sri Lanka.
(Reporting by Leika Kihara in Tokyo; Editing by Kenneth Maxwell)
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