Important $3 billion bailout for impoverished Sri Lanka approved by IMF

The International Monetary Fund has approved a nearly $3 billion bailout program for Sri Lanka over four years to help salvage the country's bankrupt economy. About $333 million will be disbursed immediately and the approval will also open up financial support from other institutions. The program will unlock financing of up to $7 billion from the IMF and other international multilateral financial institutions. China joined Sri Lanka's other creditors in providing debt restructuring assurances. President Ranil Wickremesinghe's office committed to full transparency in all discussions with financial institutions and with creditors.
Sri Lanka's Prime Minister Ranil Wickremesinghe expressed his gratitude to the IMF and international partners for their support. He has made tough decisions to ensure stability, debt sustainability and to grow an inclusive and internationally attractive economy. He has increased income taxes sharply and removed electricity and fuel subsidies, fulfilling prerequisites of the IMF program. However, he is likely to face hostility from trade unions over his plans to privatize state ventures and public resentment may increase if he fails to take action against the Rajapaksa family, who people believe were responsible for the economic crisis. Sri Lanka last year suspended repayment of its foreign debt due to a fall in tourism and export revenue due to the COVID-19 pandemic, megaprojects funded by Chinese loans that did not generate income, and releasing foreign currency reserves to hold the exchange rates for a longer period. The Central Bank says its reserves have improved and the black market no longer controls the foreign currency trade.