Sri Lanka is confident of receiving the delayed $2.9-billion IMF bailout instalment by the end of the year, as the country grapples with economic crisis, debt restructuring, and public dissatisfaction.
Delay in IMF Bailout Instalment
The governor of Sri Lanka’s Central Bank, Nandalal Weerasinghe, expressed confidence in the country receiving the delayed $2.9-billion IMF bailout instalment before the year-end. The delay was attributed to inadequate oversight and debt restructuring.
Economic Crisis and IMF Bailout
Sri Lanka faced an economic crisis in 2022, leading to severe shortages and protests resulting in the ouster of the then-President Gotabaya Rajapaksa. The country declared bankruptcy in April 2022 with over $83 billion in debt, more than half of which was to foreign creditors. In March, the IMF approved a $2.9-billion bailout package, with the first payment released shortly after.
IMF’s September Review
The IMF’s review in September indicated that Sri Lanka’s economy was recovering, but highlighted the need for improvement in tax administration, elimination of exemptions, and crackdown on tax evasion.
Challenges and Public Dissatisfaction
Although Sri Lanka’s shortages of essentials like food, fuel, and medicine have largely abated over the past year, public dissatisfaction has been growing due to the government’s efforts to raise revenue collection by increasing electricity bills and imposing heavy new income taxes on professionals and businesses.
Efforts to Secure Second Bailout Instalment
Weerasinghe mentioned that the Export–Import Bank of China, one of Sri Lanka’s major creditors, has given its consent, and he expressed hope for similar actions from other creditors in the Official Creditor Committee, including India, Japan, and France. Approval from the OCC is crucial for securing the IMF’s payment.