Colombo [Sri Lanka], June 30 (ANI): The International Monetary Fund (IMF) on Thursday reaffirmed its support to Sri Lanka which continues to face a deep economic crisis.

An IMF mission team led by Peter Breuer and Masahiro Nozaki held a discussion with the Sri Lankan authorities during an official visit to Sri Lanka from June 20 to 30.

The two sides had constructive and productive discussions on economic policies and reforms to be supported by an IMF Extended Fund Facility (EFF) arrangement.

At the end of the mission, Breuer and Nozaki issued a statement reaffirming the institution's commitment to supporting Sri Lanka at this difficult time in line with the IMF's policies.

It said that Sri Lanka is going through a severe economic crisis. The economy is expected to contract significantly in 2022, while inflation is high and rising. The critically low level of foreign reserves has hampered the import of essential goods.

"During the in-person visit, the team witnessed some of the hardships currently faced by the Sri Lankan people, especially the poor and vulnerable who are affected disproportionately by the crisis. We reaffirm our commitment to support Sri Lanka at this difficult time in line with the IMF's policies," read the statement.

The IMF said that the discussions between Sri Lanka and the institution will continue virtually with a view to reaching a staff-level agreement on the EFF arrangement in the near term.

"Because public debt is assessed as unsustainable, Executive Board approval would require adequate financing assurances from Sri Lanka's creditors that debt sustainability will be restored," it added.

During the meeting, the two sides held discussions on designing a comprehensive economic program to correct the macroeconomic imbalances, restore public debt sustainability, and realize Sri Lanka's growth potential.

The IMF said that the other challenges that need addressing include containing rising levels of inflation, addressing the severe balance of payments pressures, reducing corruption vulnerabilities and embarking on growth-enhancing reforms.

"The authorities have made considerable progress in formulating their economic reform program and we are looking forward to continuing the dialogue with them."During the meeting, Sri Lankan president Gotabaya Rajapaksa, Prime Minister and Finance Minister Ranil Wickremesinghe, Central Bank of Sri Lanka Governor Dr P. Nandalal Weerasinghe, Secretary to the Treasury K M Mahinda Siriwardana, and other senior government and CBSL officials were present.

The IMF team also met with Sri Lankan parliamentarians, representatives from the private sector, civil society organizations, and development partners.

"We would like to thank the authorities for the candid approach and warm hospitality and are looking forward to continuing our discussions in support of Sri Lanka and its people," IMF said in the statement.

Notably, Sri Lanka has been facing the worst economic crisis since independence in 1948, leading to an acute shortage of essential items like food, medicine, cooking gas and fuel across the island nation.

The nearly-bankrupt country, with an acute foreign currency crisis that resulted in foreign debt default, had announced in April that it is suspending nearly USD 7 billion foreign debt repayment due for this year out of about USD 25 billion due through 2026. Sri Lanka's total foreign debt stands at USD 51 billion. (ANI)