SL to finalise negotiations with creditors before 1st review of IMF bailout

Central Bank of Sri Lanka's Governor, Nandalal Weerasinghe said the island nation could finalise negotiations with both bilateral and commercial creditors in advance of the first review of the International Monetary Fund (IMF bailout, which is scheduled to take place in six months.

Amid the ongoing worst-ever economic crisis since independence in 1948, Sri Lanka last month had finally secured the $2.9 billion bailout from the IMF, which came as a lifeline for the country that has billions of dollars in loans.

Addressing a meeting late Wednesday night, Weerasinghe said after nearly a year of discussion, Sri Lankan authorities secured a the bailout on the condition that they will stay on course with reforms over the next four years, reports Xinhua news agency.

 

Sri Lanka has received the first tranche of about $330 million from the IMF, and this has not only eased liquidity conditions in the domestic foreign currency market, but also restored confidence among investors and other creditors, he said.

However, if the country fails to remember the reason for obtaining the IMF Extended Fund Facility and reverts to the actions that lead to fiscal imbalances, it will not have another opportunity to correct its mistakes, the Governor added.

Sri Lanka had started negotiations with the international lender in 2022 after it was hit by the severe economic crisis.

The Covid-19 pandemic, rising energy prices, populist tax cuts and inflation of more than 50 per cent has battered Sri Lanka.

A shortage of medicines, fuel and other essentials also pushed the cost of living to record highs, triggering violent nationwide protests which overthrew the Gotabaya Rajapaksa government in 2022.

As a result the country defaulted on its debts with international lenders last May for the first time in its history.

--IANS

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