Outgoing Finance Minister Of Sri Lanka Urges Country To Restructure $1 Billion Debt Payment Due In July

Just a day after being appointed as finance minister of crisis-hit Sri Lanka, Ali Sabry resigned from the position Tuesday, although his resignation is yet to be accepted by the President.

The outgoing FM of Sri Lanka reportedly pleaded for political stability amid the country¡¯s worst economic crisis in decades, saying that the country must urgently seek funds from multilateral lenders and aim to restructure the $1 billion debt payment due in July 2022, as per Reuters.

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Amid the political turmoil, the opposition and some partners of the ruling coalition had rejected calls this week for a unity government from President Gotabaya Rajapaksa, after he disbanded his cabinet amidst the street protests going on over shortages of fuel, power, food and medicine.

Analysts reportedly say that Sri Lanka is running out of options. Its foreign exchange reserves have been shrinking quickly ever since the pandemic hit the tourism sector, and its massive debt payments and currency slump have made things go from bad to worse.

Must Go To IMF For Help

Reuters

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The outgoing FM Ali Sabry said "We must look at how to structure the $1 billion international sovereign bond payment maturing in July. We must go to the IMF, there is no other solution that I can see."

The island nation of Sri Lanka also has to formulate its proposal to be presented to the IMF in the meeting scheduled in the coming days.

The upcoming $1 billion bond maturing on July 25, 2022, is a huge headache for which the outgoing finance minister has urged for a restructuring amid the urgent need for funds.

Sabry said "We must discuss with the World Bank and we must have a bridge-financing plan with the ADB. If we don't have stability, who will conduct these talks?", referring to the Philippines-based Asian Development Bank.

This week, J.P. Morgan analysts estimated that Sri Lanka's gross debt servicing would amount to $7 billion this year, with the current account deficit coming in at around $3 billion.

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