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Sri Lanka completing pre-requisites for IMF aid, President says

By News Desk
February 05, 2023

COLOMBO: Sri Lanka is completing the pre-requisites to unlock a $2.9 billion bailout from the International Monetary Fund (IMF) and expects rapid approval from the global lender, President Ranil Wickremesinghe said on Saturday.

"We are successfully completing the difficult stage required to get support from the International Monetary Fund. We expect to get their consent without delay," Wickremesinghe said in his address to the nation to mark the 75th Independence Day.

Sri Lanka, caught in the worst financial crisis since independence from Britain in 1948 triggered by a severe shortage of dollars, has seen steep inflation, a currency plunge and its economy slide into recession.

The island of 22 million people has also been hit by high taxes, a shortage of essential items such as medicine and fuel, and daily power cuts.

Wickremesinghe, who took over after his predecessor fled the country and resigned last year after thousands of

protesters occupied his office and residence, has pledged to put the economy back on track but warned it will be an uphill task.

"I know that many of the decisions I have been compelled to take since assuming the presidency have been unpopular .... I will continue this new reform program with the majority of people who love this country," he added.

Sri Lanka is currently focused on getting financing assurances from key bilateral creditors China and Japan. India, the third major creditor, agreed to support debt restructuring last month.

Sri Lanka's central bank estimates an economic turnaround in the second half of 2023 and inflation to reach single digits by the end of this year.

Meanwhile, the Paris Club of creditor nations is also ready to provide financing assurances to Sri Lanka, a key step needed to unlock bailout by the IMF.

The informal group of bilateral lenders is set to announce its support to the crisis-hit nation on a debt overhaul "soon", said one of the sources, who asked not to be named.

China and India, both non-Paris Club members, are among the country's top bilateral lenders. "Paris Club assurance is not reliant on China," the source said.

Another source said the informal group is currently reaching out to other non-Paris Club members, besides China, on financing assurances, but did not provide any further details.

India previously committed to help ease the debt burden of neighbour Sri Lanka as part of the IMF programme, and China's EximBank offered a two-year moratorium in a letter sent in January.