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Sri Lanka and IMF reach staff-level agreement for $2.9 billion bailout loan

New DelhiEdited By: Sayan GhoshUpdated: Sep 01, 2022, 12:02 PM IST
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File photo of protestors participating in an anti-government demonstration outside the President's office in Colombo. Photograph:(AFP)

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The decision was taken after prolonged talks between an IMF team and the Sri Lankan government headed by Ranil Wickremesinghe and treasury secretary Mahinda Siriwardana.

The International Monetary Fund (IMF) announced a $2.9 billion bailout for Sri Lanka on Thursday as the country suffers from its worst economic crisis since gaining independence in 1948. 

Earlier, Sri Lanka had sought up to $3 billion from the IMF, according to Reuters. 

The decision was taken after prolonged talks between an IMF team and the Sri Lankan government headed by Ranil Wickremesinghe and treasury secretary Mahinda Siriwardana.

The official statement released by the IMF said that they have reached a staff-level agreement to support the Sri Lankan economy and the bailout will be spread over four years. 

The IMF team, comprising Peter Breuer and Masahiro Nozaki, said that the bailout loan is aimed at improving Sri Lanka’s debt sustainability and unlocking the country’s growth potential. 

“The Sri Lankan authorities and the IMF team have reached a staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion).” 

“The new EFF arrangement will support Sri Lanka’s programme to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka’s growth potential,” the IMF statement read.

Sri Lanka, which is currently facing the worst inflation in its history, also went through a lot of political turmoil due to the crisis. The food and fuel shortages caused a massive uproar among the public and constant protests resulted in the resignation of former president Gotabaya Rajapaksa. 

(With inputs from agencies)