The president of Sri Lanka said on Monday that the IMF had granted the country’s request for a $2.9 billion bailout, bolstering expectations for a resolution to the island nation’s severe economic crisis.
The IMF’s board also said that the loan had been authorised, clearing the path for money to start flowing and beginning a four-year programme to support the economy of the South Asian country.
President Ranil Wickremesinghe said in a statement said,”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.”
Due to a severe lack of foreign currency reserves, Sri Lanka went into default on its international debt in April 2022 as the nation experienced its worst economic downturn since 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 Gotabaya Rajapaksa was compelled to leave the nation and resign in July as a result of widespread protests over economic mismanagement, severe shortages of food, fuel, and medicines, as well as skyrocketing inflation.
Wickremesinghe, who took over as president when Rajapaksa resigned, has enacted drastic spending cuts and tax increases in an effort to win IMF support.
There was a considerable delay to the IMF approving the package because it took time to acquire financial assurances from China, Sri Lanka’s largest bilateral lender.
Beijing said this year that it would provide Sri Lanka a two-year loan moratorium, but the IMF did not find the concession sufficient to ensure the island’s debt was manageable.
After China agreed to restructure its debt, Wickremesinghe stated that he anticipated the $2.9 billion IMF package’s first tranche would be made available within the month.