IMF provides financial relief to Sri Lanka, releases long-delayed cash

AFP Colombo, Sri Lanka May 14, 2019, 04.54 PM(IST)

File photo. Photograph:( Reuters )

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The Washington-based lender said it was releasing $164.1 million to Sri Lanka under a three-year $1.5 billion bailouts that were suspended in October during a power struggle between the president and the prime minister.

The International Monetary Fund Tuesday released a long-delayed loan instalment to Sri Lanka, providing financial relief to a government still reeling from the Easter Sunday bombings that claimed 258 lives.

The Washington-based lender said it was releasing $164.1 million to Sri Lanka under a three-year $1.5 billion bailouts that were suspended in October during a power struggle between the president and the prime minister.

With the status quo restored, the administration has been able to present a "well-targeted 2019 budget, rebuilding reserves, while maintaining a prudent monetary policy", said IMF deputy managing director Mitsuhiro Furusawa.

The power struggle was resolved after the Supreme Court ruled that President Maithripala Sirisena violated the constitution by sacking Prime Minister Ranil Wickremesinghe's government.

The loan programme, begun in June 2016, would be extended by a further year, the IMF said.

Sri Lanka estimates that it will lose about $1.5 million in revenue this year as a result of a sharp dip in tourist arrivals following the April 21 suicide bombings.

The bombings, blamed on a local jihadi group, targeted three Christian churches and three luxury hotels.

During the political crisis in the final quarter of 2018, three international credit rating agencies downgraded the country's debt making it more expensive to borrow abroad.

Official figures show that Sri Lanka will have to repay a record $5.9 billion in foreign loans in 2019.

The IMF also renewed its call to the Sri Lankan government to restructure the loss-making national carrier Sri Lankan Airlines, which has accumulated losses and debts of over $2 billion.

The government has failed to privatise the airline, but the president has revived attempts to find a partner who could inject new capital to keep the airline afloat.