Sri Lanka: The IMF has approved Sri Lanka’s request for a $2.9 billion bailout, according to the country’s President, who also stated that the program will allow Sri Lanka to access up to $7 billion in total cash.
The IMF’s board stated that it had approved the loan, paving the path for its release and launching a four-year program to support the nation’s economy. The IMF stated that the decision would provide an immediate transfer of around $333 million and would encourage additional financial support from partners, perhaps assisting Sri Lanka in overcoming its worst financial crisis in decades.
IMF Managing Director Ms. Kristalina Georgieva, however, issued a warning, urging Colombo to keep working towards tax reform, expanding social safety nets for the poor, and fighting corruption, which has been partially attributed to the crisis.
“I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda,” Sri Lanka’s President Mr. Ranil Wickremesinghe noted in a statement.
Due to a severe lack of foreign currency reserves, the nation went into default on its foreign debt in April 2022 as it experienced its worst economic crisis since its independence. The 22 million-person nation on the Indian Ocean ran out of money to pay for even the most basic imports, resulting in severe societal unrest.
President Mr. Gotabaya Rajapaksa was forced to leave the nation and resign in July 2022 as a result of large-scale demonstrations over his mismanagement of the economy, severe shortages of food, fuel, and medications, and skyrocketing prices.
President Mr. Wickremesinghe, who took over for Rajapaksa, has enacted severe spending cuts and tax increases in an effort to win IMF support. The rescue had received preliminary approval from IMF staff in September, but the final go-ahead wasn’t given until China, the island’s largest bilateral lender, agreed to restructure its loans to Colombo.
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