Sri Lanka will get the first $330 million tranche of an International Monetary Fund (IMF) bailout in the next two days, the global lender said on Tuesday, putting the onus on the cash-strapped country to rein in its debt to sustainable levels. Debt trap Sri Lanka to get first tranche of IMF bailout funds in two days.
Economic mismanagement coupled with the impact of the Covid-19 pandemic left Sri Lanka severely short of dollars for essential imports at the beginning of last year, tipping the island nation into its worst financial crisis in seven decades.
The IMF’s executive board on Monday approved a nearly $3 billion bailout with the endorsement expected to catalyse additional support to the tune of $3.75bn from the likes of the World Bank, the Asian Development Bank and other lenders.
This was the 17th IMF bailout for Sri Lanka and the third since its decades-long civil war ended in 2009. Debt trap Sri Lanka to get first tranche of IMF bailout funds in two days.
The office of President Ranil Wickremesinghe said the programme would enable it to access up to $7bn in overall funding.
“Sri Lanka is no longer deemed bankrupt by the world,” Wickremesinghe said in a video statement. “The loan facility serves as an assurance from the international community that Sri Lanka has the capacity to restructure its debt and resume normal transactions.”
Getting financial assurance from China, its largest bilateral creditor, was the last remaining hurdle for Sri Lanka in securing the IMF bailout. Once China confirmed its backing this month, the IMF went ahead with the deal.
Sri Lanka, which also needed support from other major lenders like India and Japan, thanked the international community, including the United States, for talking to the Chinese government to back its debt restructuring plan.
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