Sri Lanka Secures $2.9B Bailout From IMF

Improve the News Foundation -
0:00
/0:00

Facts

  • Sri Lanka has reportedly obtained a [nearly] $3B bailout from the International Monetary Fund (IMF) as it endures a crippling economic crisis. [Editors Note - widely reported as 2.9B in multiple sources.]1
  • The IMF's Executive Board approved the four-year bailout program, authorizing an immediate release of about $333M and opening up financial support from other institutions following Colombo's adoption of austerity measures to meet IMF preconditions.2
  • IMF personnel had conditionally approved the action in September, but formal approval was delayed until China pledged to restructure its loans to the island nation.2
  • According to the IMF, the 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.3
  • Pres. Ranil Wickremesinghe said the program would allow the country to access up to $7B in overall funding and help strengthen Sri Lanka's position in international capital markets as the Indian Ocean nation tries to recover from economic and social calamity.2
  • Sri Lanka has been experiencing economic turmoil since it defaulted on its foreign debt in April 2022. Former Pres. Gotabaya Rajapaksa fled the country and resigned in July amid social upheaval, being replaced by Wickremesinghe, who has implemented strict spending cuts to secure IMF funds.4

Sources: 1BBC News, 2Al Jazeera, 3Reuters and 4NDTV.

Narratives

  • Narrative A, as provided by Lanka Business Online. While Sri Lanka has endured many hardships over the past few years due to converging crises, the country has an opportunity to rise above economic collapse and political instability to forge a new future. The road to recovery will not be easy, but with some help from creditors and buy-in from citizens, Sri Lanka can start to provide its people with hope and security.
  • Narrative B, as provided by Lowy Institute. Sri Lanka’s economic crisis has spiraled into a human rights catastrophe that must be addressed before it is too late. Sri Lankans are struggling to put food on the table and many people are unable to receive vital healthcare. The IMF’s loan will do little to reverse the deep human cost of the ongoing crisis until the country's social problems are effectively dealt with.