In response to Sri Lanka’s greatest economic crisis since earning independence in 1948, the International Monetary Fund (IMF) announced a $2.9 billion bailout on Thursday.
Earlier, according to Reuters, Sri Lanka requested up to $3 billion from the IMF.
IMF
Â
The choice was made following extensive negotiations between an IMF delegation and the government of Sri Lanka, which was led by Ranil Wickremesinghe and the treasury secretary Mahinda Siriwardana.
According to the IMF’s official statement, a staff-level agreement has been achieved to sustain the Sri Lankan economy, and the bailout would last for four years.Â
The bailout loan, according to the IMF team, which included Peter Breuer and Masahiro Nozaki, is intended to improve Sri Lanka’s debt sustainability and unleash the nation’s growth potential.
The International Monetary Fund team and the Sri Lankan government have agreed at the staff level to assist the government’s economic adjustment and reform programs with a fresh 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equal to US$2.9 billion).
According to an International Monetary Fund statement, “The new EFF arrangement will enable Sri Lanka’s program to restore macroeconomic stability and debt sustainability while preserving financial stability, decreasing corruption vulnerabilities, and releasing Sri Lanka’s growth potential.”
Due to the crisis, Sri Lanka, which is currently experiencing the greatest inflation in its history, has saw significant political unrest. The population was greatly outraged by the food and fuel shortages, and ongoing demonstrations led to the resignation of former president Gotabaya Rajapaksa.
