COLOMBO: The Sri Lankan rupee (LKR) will progressively strengthen against the US dollar once the country enters into an International Monetary Fund (IMF) agreement, Sri Lanka President Ranil Wickremesinghe said in a statement.
The International Monetary Fund is set to approve a USD 2.9 billion bailout package for the country on Monday, March 20, said the Central Bank of Sri Lanka's Governor Nandalal Weerasinghe.
Sri Lanka may begin restructuring its external debt as soon as it receives the IMF cash, Wickremesinghe said, adding that the Sri Lankan rupee would trade between 185 and 200 to the dollar.
Sri Lanka, an island nation in distress, will stabilise its economy and establish a budget surplus by 2026, he added, adding that the country hopes to receive up to 10 years to repay the debt it has accumulated.
After being plagued by its biggest economic crisis since gaining independence in 1948 in 2022, Sri Lanka began talks with the international lender on the matter.
As the nation's economic crisis worsens, the Sri Lankan rupee is plummeting much beyond the levels that the central bank had anticipated when it depreciated the currency. On March 9, the central bank depreciated the currency.
It said two days earlier it thought the exchange rate would reach “not more than 230 rupees per US dollar” . However, the rupee quickly depreciated below that mark; as of today (March 21), it was trading at 290 to 297 to the dollar.
A year ago, Sri Lanka plunged into its sevre financial crisis ever, rudely shattering its popular perception as a more progressive, prosperous and democratic South Asian country. Since the angry mass mobilisation in the form of the ‘struggle protests, Sri Lanka is yet to emerge from the economic and political volatility and social upheaval.
Sri Lanka is also reportedly aiming to bring down the primary deficit, or the deficit without interest costs, a key performance criterion in an IMF fiscal framework from a negative 4 percent in 2022 to a deficit of 1 percent in 2023 in a 3 percent of GDP correction
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