Sri Lanka secures US$3 billion IMF bailout – now for the difficult debt talks
- The 48-month loan programme will include an immediate payment of US$333 million to the bankrupt nation, the IMF’s executive board said
- Next is debt-relief talks, which have stalled for other vulnerable nations amid disagreements between China and traditional lenders led by the US
The lender’s executive board approved the 48-month programme in Washington on Monday, and said it will include an immediate disbursement of about US$333 million.
“Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis,” the IMF said in a statement. “The economy is facing significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead up to the crisis, further aggravated by a series of external shocks.”
The bailout will inject much-needed funding for a nation grappling with soaring prices, supply shortages and eroded foreign-currency reserves after defaulting on its overseas debt last year.
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The focus will turn next to debt talks, which Fitch Ratings has said may drag on as creditors debate whether to include local-currency sovereign borrowing in the restructuring. The rating company cut its score on Sri Lankan rupee debt in December, saying a default was probable.