IMF Approves $3 Billion Loan for Sri Lanka amid its Worst Financial Crisis

IMF Approves $3 Billion Loan for Sri Lanka amid its Worst Financial Crisis

The International Monetary Fund (IMF) has approved a nearly $3 billion bailout for Sri Lanka, as the country faces its worst financial crisis in more than seven decades. About $333 million will be immediately disbursed to the country under this programme. Sri Lanka defaulted on its debts with international lenders for the first time in history in 2022.

The IMF on March 20 said its executive board approved the bailout, and the country’s presidency said the program will enable it to access up to $7 billion in overall funding. The immediate disbursement of about $333 million will spur financial support from other partners, potentially helping theAsian country emerge from its worst financial crisis in over seven decades.

IMF Managing Director Kristalina Georgieva said Sri Lanka also needs to undertake various reforms.

“For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical,” Georgieva said in a statement.

EFF refers to the IMF’s Extended Fund Facility. The IMF MD emphasised the need for ambitious revenue-based fiscal consolidation. “For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical,” Georgieva said in the statement.