IMF approves $3b for Sri Lanka

Four-year extended financing arrangement may help Sri Lanka emerge from its worst financial crisis in over 70 years

COLOMBO/ WASHINGTON:

The International Monetary Fund’s executive board on Monday approved a $3 billion four-year extended financing arrangement for Sri Lanka, paving the way for immediate disbursement of about $333 million to the cash-strapped country potentially helping the country emerge from its worst financial crisis in over seven decades.

Sri Lankan President Ranil Wickremesinghe’s office said the decision will enable the country to access up to $7 billion in funding overall.

The IMF said the new Extended Fund Facility (EFF) arrangement program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential. It said the board’s approval would catalyze financial support from other development partners.

Sri Lanka defaulted on its foreign debt in April 2022 as the country plunged into its worst economic crisis, running out of cash to finance even the most essential imports, causing massive social unrest. The government has already doubled taxes, increased energy tariffs threefold and slashed subsidies to meet the IMF’s preconditions.

Published in The Express Tribune, March 21^st, 2023.

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