Rajapaksa after he dissolved his government, hoping to quell weeks-long street protests over shortages of fuel, electricity, food and medicine.
With its foreign exchange reserves rapidly shrinking, huge debt payments due and the rupee plunging, analysts say the government – controlled by Rajapaksa and his older brother Mahinda, the prime minister – is running out of options.
Central bank data on Thursday showed reserves fell 16% to $1.93 billion in March.
“We should look at how to structure the payments of the $1 billion international sovereign bond maturing in July,” said Ali Sabri, who submitted his resignation to Rajapaksa on Tuesday. “We should go to the IMF, there is no other solution that I can see.” Sabri was transferred to finance from the Department of Justice on Monday to replace President Rajapaksa’s younger brother, Basil Rajapaksa. It was not immediately clear if Rajapaksa had accepted Sabri’s resignation, days before scheduled talks with the International Monetary Fund for emergency loans.
As the island nation tries to speed up drafting of proposals to present to IMF chief Rajapaksa on Thursday, KMM Siriwardana, a deputy central bank governor who previously worked with the fund, has appointed Treasury Secretary.
Data from MarketAxess showed that the $1 billion bond due on July 25 was trading at 54 cents on the dollar, the lowest level since spring 2020 when the COVID-19 virus hit global financial markets.
Sri Lanka’s other dollar-denominated sovereign bonds traded at more volatile levels, with most hands trading around 40 cents in the dollar.
“We must have political stability to find solutions to the financial crisis,” Sabri said. We have to discuss with the World Bank and we have to have a phased financing plan with the Asian Development Bank. If we don’t have stability, who will have these talks? ‘, referring to the Philippines-based Asian Development Bank.
Read all the latest news, breaking news and live updates for IPL 2022 here.