Sri Lankan President Ranil Wickremesinghe said on Monday (March 20) that International Monetary Fund (IMF) has approved a bailout request worth USD 2.9 billion. This has raised hopes of crisis in the island nation easing. IMF board has also confirmed that the loan has been approved. This clears the way for release of funds and kicks off a four-year programme designed to help economy of the South Asian nation in 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,” President Ranil Wickremesinghe said in a statement.
In April 2022, Sri Lanka defaulted on its foreign debt and plunged into its worst economic downturn since independence because of shortage of foreign currency.
The Indian Ocean nation of around 22 million people ran out of cash to finance even the most essential imports, causing massive social unrest.
Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines, and runaway inflation forced president Gotabaya Rajapaksa to flee the country and resign in July.
Rajapaksa was replaced by Wickremesinghe as president who has implemented tough spending cuts and tax hikes in an attempt to secure the IMF assistance.
There was a long delay to the IMF approving the package because it took time to secure financial assurances from China, Sri Lanka’s largest bilateral lender.
Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka, but the concession fell short of IMF expectations for the sustainability of the island’s debt.
(With inputs from agencies)
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