1st tranche of bailout in 2 days: IMF
COLOMBO: Sri Lanka will get the first US$330 million (11.3 billion baht) tranche of the International Monetary Fund’s bailout in the next two days, the global lender said yesterday, putting the onus on the cash-strapped nation to rein in its debt to sustainable levels.
Economic mismanagement coupled with the impact of the Covid-19 pandemic left Sri Lanka severely short of dollars for essential imports at the start of last year, tipping the island nation into its worst financial crisis in seven decades.
The IMF’s executive board on Monday approved a nearly $3 billion bailout for Sri Lanka with the endorsement expected to catalyse additional external support for the country to the tune of $3.75 billion from the likes of the World Bank, the Asian Development Bank and other lenders.
The office of the country’s president, Ranil Wickremesinghe, said the programme will enable it to access up to $7 billion in overall funding.
“Sri Lanka is no longer deemed bankrupt by the world,” Mr Wickremesinghe said in a video statement released by his office. “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.”
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% and a 66% increase in power tariffs.
The economy is expected to shrink by 3% this year after contracting 7.8% in 2022.
Half of the families in Sri Lanka have been forced to reduce the portions they feed their children, according to a survey by Save the Children released this month.
Shehan Semasinghe, Sri Lanka’s state minister of finance, said the IMF bailout was “absolutely essential” for the country.