IMF to work with Sri Lanka’s new President on US$ 3bn loan

The International Monetary Fund (IMF) said it’s looking forward to working with Sri Lanka’s newly elected president Anura Kumara Dissanayake on the latest review of the country’s US$ 3billion bailout package.

“We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable,” the organization said in a statement after President Anura Kumara Dissanayake was sworn into office on Monday. 

“We look forward to working together with President Dissanayake and his team towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery since entering one of its worst economic crises in 2022,” the IMF added.

Dissanayake had campaigned on a promise to reopen negotiations with the IMF on the country’s big loan programme. It came with deeply unpopular tax hikes and spending cuts that made the cost-of-living crisis a top issue for voters. 

Reviewing the debt plan, though, risks delaying additional loans from the international organization. Sri Lanka needs to meet certain fiscal criteria before the next round of funding is released. 

The country’s former president Ranil Wickremesinghe, brokered the deal with the IMF and said upending it would be a costly mistake for the economy. Prior to the cash injection, the country faced an unprecedented economic crisis where spiraling inflation wiped out household savings and ignited protests.

Investors hope that Dissanayake will stick with the loan plan. Rizvie Salih, an executive committee member of the president’s coalition party, said Saturday that the country will remain with the programme but seek modifications.
In its statement, the IMF said the recent agreement with bondholders “represents significant progress in Sri Lanka’s debt restructuring process,” adding that it’s still “subject to confirmation on comparability of treatment by Sri Lanka’s Official Creditors Committee.”