Sri Lankan government panel says international financial aid is needed

General view of an office and apartment complex in the business district of Colombo, Sri Lanka, September 9, 2020. REUTERS/Dinuka Liyanawatte

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COLOMBO, March 21 (Reuters) – A Sri Lankan government-appointed committee said on Monday that the crisis-hit country’s central bank and finance ministry should form a team to seek emergency international financial assistance as its economy is plagued by a shortage of foreign exchange.

The South Asian island of 22 million people said last week it would turn to the International Monetary Fund (IMF) to help resolve its worst economic crisis in years.

The country has struggled to pay for essential imports including fuel, food and medicine in recent weeks as its foreign exchange reserves dry up. Read more

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“The technical team should immediately come up with a reform program to propose international financial assistance,” the 16-member advisory committee said in a press release issued by the office of President Gotabaya Rajapaksa.

Sri Lanka must repay about $4 billion in debt this year, including a $1 billion international sovereign bond maturing in July. But its reserves fell to $2.31 billion at the end of February, down about 70% from two years ago.

“The foreign exchange crisis is the main reason for this situation,” said the committee, appointed this month to assist Rajapaksa’s administration.

He added that financial and legal advisers should also be immediately appointed, alongside a team of experts to assist the country’s finance minister, who will travel to Washington DC next month for talks with the IMF.

A group of Sri Lanka’s biggest international bondholders have hired law firm White & Case for advice, sources said last week, as markets brace for impending debt restructuring.

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Written by Devjyot Ghoshal, edited by Ed Osmond

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