IMF revives Sri Lanka bailout hit by power struggle

Colombo: The International Monetary Fund revived a US$1.5bil (RM6.1bil) bailout for Sri Lanka that was suspended over a government power struggle last year that seriously slowed economic growth.

The Washington-based lender said officials visiting Colombo agreed to re-activate the three-year loan, which started in 2016 and spread the instalments over an additional year.

“The team reached understandings at the staff level with the Sri Lankan authorities ... to allow more time for the completion of the economic reform agenda,” the IMF said.

The Fund had been due to release an instalment in October when President Maithripala Sirisena sacked his Prime Minister and called fresh elections, triggering a two-month power struggle in the island nation.

Because of the crisis, the economy grew by just 3.0% last year, making it the slowest expansion in 17 years, according to the Central Bank of Sri Lanka.

The IMF said it expected Sri Lanka’s growth to improve to 3.5% in 2019.

Sri Lanka’s Supreme Court eventually held that Sirisena’s actions were unconstitutional, allowing Premier Ranil Wickremesinghe to resume his duties.

Wickremesinghe told parliament in January that his dismissal on Oct 26 was a “coup” and a “death blow” to the economy. — AFP