Bailouts and balances: Tough choices ahead for Sri Lanka

Sri Lanka's IMF rescue plan has geopolitical repercussions. The Island nation has entered a difficult terrain with China's expansionist interests and India and Japan's security concerns

In September 2022, Sri Lanka finalised a staff-level agreement with the International Monetary Fund (IMF). After witnessing months of food and energy shortages and political instability, this four-year rescue plan, worth $2.9 billion, has certainly brought a sigh of relief in the island state. However, the conditions attached to accessing this fund will prove to be difficult, compelling Sri Lanka to accommodate the regional powers’ interests and up its balancing game. 

The IMF agreement has laid down the following conditions for the Sri Lankan government: A cut in spending, increase in taxes, policies against corruption, autonomy for the central bank, and