Bankrupt Sri Lanka opens IMF talks, begins shutdown

• Sri Lanka is in grip of the worst economic crisis after running out of foreign currency.
• IMF begins negotiations with Colombo on the possible bailout.
• Students demand the resignation of President Gotabaya Rajapaksa.

Sri Lanka stopped schools and suspended non-essential government activities, kicking off a two-week closure to conserve rapidly diminishing fuel reserves as the IMF began negotiations with Colombo on a possible bailout.

The 22-million-person country is in the grip of its worst economic crisis after running out of foreign currency to pay for even the most basic imports such as food, fuel, and medications.

On Monday schools were shut and state offices worked with skeleton staffing as part of government plans to reduce commuting and save precious petrol and diesel.

Read More: Sri Lankan PM Wickremesinghe begins talks with IMF delegation

Sri Lanka is facing record-high inflation and lengthy power blackouts that have contributed to months of protests — sometimes violent — calling on President Gotabaya Rajapaksa to step down.

Thousands of students marched through the streets of Colombo on Monday chanting “Gota go home” in reference to the president, who they accuse of corruption and mismanagement.

“The time for Gotabaya to bow down with dignity is long gone,” student leader Wasantha Mudalige told reporters. “Now we have to chase him out.”

Police arrested 21 student activists who blocked all gates to the presidential secretariat building while declaring Monday, Rajapaksa’s 73rd birthday, a “day of mourning” for the nation.

Officers said the students had blocked Sri Lanka’s finance ministry secretary from attending a key meeting with officials from the International Monetary Fund.

But the office of Prime Minister Ranil Wickremesinghe said talks with a visiting IMF delegation, the first in-person discussions since Sri Lanka asked for a bailout in April, went ahead as planned.

Both sides said the talks would continue until the end of the month.

A financial rescue plan is not expected until Colombo agrees with its creditors on restructuring its $51 billion foreign debt, a process that could take months, according to both Sri Lankan and IMF officials.

The country defaulted on its debt in April and went cap-in-hand to the IMF which has asked Colombo to raise taxes and restructure loss-making state enterprises.

Most offices in Sri Lanka were shut on Monday and all schools were closed but hospitals and the main sea and airports in the capital were still operating.

Hundreds of thousands of motorists waited in miles-long queues across the country for petrol and diesel despite the energy ministry announcing fresh stocks would not arrive for at least three days.

Australia chips in

Wickremesinghe’s office said he met with visiting Australian home affairs minister Clare O’Neil to “deepen cooperation and assist Sri Lanka as the country faces very difficult economic times”.

Canberra announced $35 million in emergency assistance to meet the urgent food and healthcare needs of the impoverished island.

“Not only do we want to help the people of Sri Lanka in its time of need, but there are also deeper consequences for the region if this crisis continues,” Australian foreign minister Penny Wong said in a statement.

Australia is a member of the “Quad”, a diplomatic grouping with India, Japan and the United States that has expressed concern over China’s growing influence in the region.

China holds more than 10% of Sri Lanka’s external debt and has invested considerably in the strategically located island’s infrastructure.

The UN started feeding pregnant mothers in Sri Lanka last week.

UN: Four out of five people in the country are skipping meals due to rising food prices. It warned of a potential “dire humanitarian crisis”.

Read More: Troops in Sri Lanka open fire to quell riots over petrol