Raise taxes and tighten monetary policy: IMF

Sri Lanka must tighten monetary policy, raise taxes, and adopt flexible exchange rates to address its debt crisis, a senior International Monetary Fund (IMF) official said yesterday (26), Reuters reported.

“The requirement for fund lending will be progress toward debt sustainability. Monetary policy has to be tightened to keep inflation in check. We see a need for flexible exchange rates,” said IMF Asia and Pacific Department Acting Director Anne-Marie Gulde-Wolf, speaking at an online news conference.

According to Reuters, Gulde-Wolf did not reply to a question on the total value for a prospective IMF package, nor the estimated timing of a conclusion to the negotiations with Sri Lanka. However, she said that the meeting with the Sri Lankan Government had been “fruitful”.

“We’ve had very good, fruitful, technical discussions on preparations for the negotiations with authorities over the past weekend and a couple of days before.”

Minister of Finance and Justice Ali Sabry was in Washington last week to talk to the IMF, the World Bank, India, and others about financing help for Sri Lanka, which has suspended payments on portions of its $ 51 billion in external debt.

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