IMF: Amid tremendous economic and social challenges in Sri Lanka, the International Monetary Fund (IMF) approved a bailout program of nearly $3 billion for the country over four years to help salvage the country’s bankrupt economy. The IMF announced on Monday (20 March) that the executive board has approved the bailout programme. According to the IMF approximately $333 million will be disbursed immediately.
Sri Lanka faces financial sector vulnerabilities
“Sri Lanka faces tremendous economic and social challenges with high inflation, dwindling reserves, an unsustainable public debt and a severe recession amid financial sector vulnerabilities,” the statement quoted IMF Managing Director Kristalina Georgieva as saying. “
The approval will unlock financing of up to $7 billion from the IMF
“Deep reforms are needed in institutions and governance structures. For Sri Lanka to recover from the crisis, rapid and timely implementation of the EFF-supported program with strong ownership for reforms is critical. President Ranil Wickremesinghe’s office said the approval would unlock up to $7 billion in funding from the IMF and other international multilateral financial institutions.
Earlier this month, the last hurdle for approval was cleared when China joined Sri Lanka’s other creditors in providing debt restructuring assurances.
Wickremesinghe expressed gratitude
“From the outset, we have been committed to complete transparency in all our discussions with financial institutions and our creditors,” Wickremesinghe said in a statement from his office. Want to bring the economy back on track for the long term through prudent fiscal management and our ambitious plans
reform agenda.
Wickremesinghe said he has taken some tough decisions to ensure stability, debt sustainability and develop an inclusive and internationally attractive economy. Sri Lanka rapidly increased income taxes and removed electricity and fuel subsidies, meeting the prerequisites of the IMF program. Authorities must now hold discussions with Sri Lanka’s creditors on how to restructure its debt.
Hope the administration will act fast
“Having received specific and credible financing assurances from major official bilateral creditors, it is now critical for officials and creditors to make rapid progress toward restoring debt stability in line with the IMF-backed program,” Georgieva said.
“Welcome the authorities’ commitments to achieve a debt resolution transparently, in line with the parameters of the program and to share the burden equitably among creditors in a time-bound manner,” she said.
(with inputs from agencies)
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