Sri Lanka one step closer to IMF $2.9bln loan after China's support
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The Fund says the bailout is expected to be approved soon for Sri Lanka after Beijing agreed to restructure its loan to the economically-struggling Asian country.
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The International Monetary Fund (IMF) logo seen outside the headquarters building in Washington, US, September 4, 2018 (Reuters)
The International Monetary Fund (IMF) said on Tuesday that China's approval to restructure its loans to Sri Lanka will allow the Fund to approve the $2.9 billion loan to the Asian country that was earlier agreed on.
"Sri Lanka has now received financing assurances from all major bilateral creditors," said the Director of IMF's Asia and Pacific Department Krishna Srinivasan.
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“This paves the way for consideration by the IMF’s Board on March 20 the approval of the Staff Level Agreement reached on September 1, 2022 for financing under an Extended Fund Facility,” Srinivasan added, noting that the "approval by the board would also catalyze financing from other creditors, including the World Bank and the Asian Development Bank."
“The arrangement will support the authorities’ program of ambitious reforms, that they have already embarked upon, which will help Sri Lanka emerge from its current crisis and set it on a trajectory of strong and inclusive growth,” the statement noted.
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Sri Lanka suffered from an unprecedented financial crisis last year as 22 million people endured months of food and fuel shortages, along with lengthy power cuts.
The government has defaulted on its $46 billion foreign debt and was negotiating a bailout deal with the IMF to allegedly repair its shattered finances, however, the negotiations were earlier suspended amid talks with China, its largest bilateral creditor, over debt.
Months of protests during the height of the crisis pushed then-President Gotabaya Rajapaksa to depart the country and resign in July 2022 following accusations of economic mismanagement and corruption.
His successor, Ranil Wickremesinghe, has negotiated with international creditors and imposed tax hikes "to smooth passage of the IMF bailout."
The people of #SriLanka are suffering amid a crippling economic crisis that has been accumulating for more than a decade.#srilankacrisis pic.twitter.com/oqsMLAm1pZ
— Al Mayadeen English (@MayadeenEnglish) March 16, 2022
