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EconomyApr 25, 2022 09: 21PM ET

IMF urges Sri Lanka to tighten monetary policy, raise tax to address debt woes © Reuters. FILE PHOTO: Demonstrators shout mottos versus Sri Lanka’s President Gotabaya Rajapaksa, near the Presidential Secretariat, inthemiddleof the nation’s financial crisis, in Colombo, Sri Lanka, April 23,2022 REUTERS/Navesh Chitrakar/File Photo

(Reuters) – Sri Lanka needto tightenup financial policy, raise tax and embrace versatile exchange rates to address its financialobligation crisis, a senior International Monetary Fund (IMF) authorities stated on Tuesday.

The nation of 22 million individuals hasactually askedfor loans from the IMF as it hasahardtime to pay for imports amidst squashing financialobligation and a sharp drop in foreign exchange reserves that has sustained skyrocketing inflation.

“We’ve had extremely great, productive, technical conversations on preparations for the settlements with authorities over the past weekend and couple of days priorto,” stated Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, speaking at an online news conference.

Sri Lankan Finance Minister Ali Sabry was in Washington last week to talk to the IMF, the World Bank, India and others about funding assistance for his nation, which hasactually suspended payments on parts of its $51 billion in external financialobligation.

“The requirement for fund financing will be development towards financialobligation sustainability,” Gulde-Wolf stated, calling on Sri Lanka for procedures to boost tax incomes to address crucial costs requirements.

“Monetary policy has to be tightenedup to keep inflation in inspect,” she stated. “We see a requirement for versatile exchange rates.”

Gulde-Wolf did not reply to a concern on the overall worth for any IMF bundle, nor the approximated timing of a conclusion to the settlements with Sri Lanka.

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