Sri Lanka hopes to reach initial agreement with IMF for help

COLOMBO, Sri Lanka (AP) — Sri Lanka's central bank chief said Thursday he is hopeful the crisis-ridden island nation can reach a preliminary agreement that could lead to a bailout package with the International Monetary Fund when officials from the financial institution visit Sri Lanka later this month.

The Indian Ocean country is facing its worst economic crisis and has been negotiating with the IMF while government leaders in Colombo have said Sri Lanka is effectively bankrupt.

Nandalal Weerasinghe, the governor of Sri Lanka's central bank, said he hoped that IMF officials and Sri Lanka's government could “finalize and reach a staff-level agreement" on the policy package during their meetings.

Sri Lanka announced in April that it is suspending repayment of foreign loans. Its total foreign debt is $51 billion, of which it must pay $28 billion by 2027. The country has said it needs to restructure all of its debt.

Weerasinghe told reporters on Thursday that the agreement being sought with the IMF would give them “a clear picture on debt sustainability and debt targets for us to achieve in the next 10 years.”

Once an agreement is reached, Weerasinghe said, Sri Lanka would approach sovereign bond holders and other external creditors.

"We hope all our creditors will support Sri Lanka once they see the strong macro program endorsed by the IMF," he said.

Sri Lanka’s economic meltdown has triggered a political crisis, with widespread anti-government protests erupting across the country. Massive public protests ousted Sri Lankan President Gotabaya Rajapaksa last month.

Rajapaksa fled the country after thousands of protesters stormed his official residence and resigned in exile. He first fled to Maldives, then to Singapore and is now in Thailand.

The protesters blamed...