Lanka economic crisis: From protests to IMF's $3-billion rescue

The IMF has approved a nearly $3-billion bailout which could help the country unlock up to $7 billion more from other lenders

Here are some developments in the nation’s economic crisis:

2022

March 31: Demonstrators march to President Gotabaya Rajapaksa's private residence to protest over worsening economic conditions.

May 9: Prime Minister Mahinda Rajapaksa resigns. Countrywide violence leaves nine dead and about 300 injured

May 18: Lanka falls into default after a 30-day grace period on a $78 million coupon payment expires

July 13: President Gotabaya Rajapaksa flees Sri Lanka

July 15: Parliament accepts Rajapaksa's resignation. Ranil Wickremesinghe, is sworn in as acting president.

Sept 1: Lanka reaches a preliminary agreement with the IMF for a loan of $2.9 billion

Nov 14: Budget lays down several measures, including reducing the government’s deficit

2023

Jan 24: Reuters reports the Export-Import Bank of China had offered Lanka a two-year moratorium on its debt and said it would support the country’s efforts to secure the IMF loan

Feb 7: The Paris Club of creditors gives financing assurances to support the IMF’s approval of an extended fund facility for Lanka

Feb 16: The country raises electricity prices by 66 per cent

March 8: The Export-Import Bank of China tells Sri Lanka it will try to finalise in the months ahead how it treats debt owed by the crisis-hit nation, according to a letter seen by Reuters, which also reiterated a moratorium for debt due in 2022 and 2023

March 20: The IMF says its executive board approved a nearly $3 billion bailout for Sri Lanka. The decision will allow an immediate disbursement of about $333 million.

Wickremesinghe: The ‘unpopular’ PM

Since he became Lanka’s president in July 2022, Wickremesinghe has managed to a keep a lid on mass protests, improve supplies of essentials and on Monday, secured a nearly $3 billion bailout from the International Monetary Fund (IMF) that opens the door to restructuring about $58 billion of debt and receive funding from other lenders.

He has done that despite a deeply unpopular government.

According to a Mood of the Nation poll run in February by private think-tank Verité Research, the government’s approval rating was 10 per cent, the same as in October but higher than an all-time low of 3 per cent in June, when Rajapaksa was in power.

Born into a prominent family of politicians and business-people, the lawyer and six-time prime minister has little support beyond wealthy urban voters. His ability to make policy depends to a great extent on the support of the Sri Lanka Podujana Peramuna party, largely controlled by the Rajapaksa family.

For now, he is enjoying that support, and he said on Sunday that his country was on the right track.

"”here's fuel now, there’s electricity, there's fertiliser and by April, there will be enough rice and other foodstuff,” he said at an event in Colombo.

“We will no longer be declared a bankrupt nation, but a nation that can restructure its debts.”

Wickremesinghe successfully negotiated economic support from top lenders. But Lanka still needs to renegotiate its debt, a potentially drawn-out process where Wickreme–singhe will have to deal with demands creditors.

He still has to turn around the economy, which shrank 7.8 per cent in 2022.      

               
               - Reuters