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22-03-2023
PENNSYLVANIA/ COLOMBO: Sri Lanka will get the first $330m tranche of an International Monetary Fund (IMF) bailout package in the next two days, says the global lender, putting the onus on the cash-strapped country to rein in its debt to sustainable levels.
Economic mismanagement, coupled with the effects of the COVID-19 pandemic, left Sri Lanka severely short of dollars for essential imports at the beginning of last year, tipping the island nation into its worst financial crisis in seven decades.
The IMF’s executive board on Monday approved nearly $3bn, with the endorsement expected to catalyse additional external support to the tune of $3.75bn from the likes of the World Bank, the Asian Development Bank and other lenders.
This was the 17th IMF bailout for Sri Lanka and the third since its decades-long civil war ended in 2009.
The office of President Ranil Wickremesinghe said the program would enable it to access up to $7bn in overall funding.
“Sri Lanka is no longer deemed bankrupt by the world,” Wickremesinghe said in a video statement.
“The loan facility serves as an assurance from the international community that Sri Lanka has the capacity to restructure its debt and resume normal transactions.”
Journalist Minelle Fernandez, reporting from Colombo, said the president wants the first tranche of IMF money to be used in the neediest areas, such as medicine and tourism.
“He has talked about medicine. He has talked about the tourism sector, that these funds would be used to shore up those sectors that are really facing the brunt of the economic crisis,” she said.
Getting financial assurance from China, its largest bilateral creditor, was the last remaining hurdle for Sri Lanka in securing the IMF bailout. Once China confirmed its backing this month, the IMF went ahead with the deal.
Sri Lanka, which also needed support from other big lenders like India and Japan, thanked the international community, including the United States, for talking to the Chinese government to back its debt restructuring plan.
The IMF funding will, however, not immediately help millions of Sri Lankans, who are being squeezed by soaring costs of living, high income taxes of up to 36 percent and a 66 percent increase in power tariffs.
Half of Sri Lanka’s families have been forced to reduce portions they feed their children, according to a survey by Save the Children released this month. (Int’l News Desk)
