WASHINGTON: The International Monetary Fund (IMF) said discussions with Sri Lanka on a potential IMF loan programme are at an early stage and any deal would require “adequate assurances” that the island country’s debts can be put on a sustainable path.

       In a statement emailed to Reuters, IMF Sri Lanka mission chief Masahiro Nozaki said that IMF managing director Kristalina Georgieva discussed lending options and policy plans with a Sri Lankan delegation.

       “An IMF-supported programme should be designed to resolve Sri Lanka’s acute balance of payments problems and put the economy back on a sustainable growth path as early as possible,” Nozaki said.

       The statement came after protests in response to shortages of fuel and other essentials turned deadly on Tuesday and Sri Lanka’s finance minister formally asked the fund for a Rapid Financing Instrument loan for countries needing urgent balance-of-payments support.

       Nozaki said the IMF is “very concerned about the current economic crisis in Sri Lanka and hardships suffered by the people, especially the poor and vulnerable.”

       But he noted that IMF staff had determined last month in an annual economic review that Sri Lanka’s public debt was unsustainable, and the country needs to take steps to restore debt sustainability prior to any IMF lending, including the emergency Rapid Financing Instrument.

       Such restoration of debt sustainability typically requires a restructuring or reprofiling of public debts, which in Sri Lanka’s case would require cooperation from China, one of its largest bilateral creditors. — Reuters