IMF reaches $2.9bn bailout deal ‘to stabilise Sri Lanka economy’

Sri Lanka has been reeling under its worst financial crisis since independence

The International Monetary Fund (IMF) on Thursday announced it has reached an agreement with cash-strapped Sri Lanka for a $2.9bn bailout package.

The debt-ridden island nation had sought up to $3bn from the Washington-based lender in an effort to revive its economy from the worst financial crisis faced by the country since its independence in 1948, one which led to the toppling of the president and months of street protests.

The IMF and Sri Lankan authorities have reached a staff-level agreement to support the country’s economic policies with a 48-month arrangement, the lender said in a statement.

“The objectives of Sri Lanka’s new Fund-supported programme are to restore macroeconomic stability and debt sustainability,” it added.

The agreement, however, is subject to approval by IMF management and its executive board and is also contingent on the Sri Lankan authorities.

“Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps,” the statement added.

The bailout agreement comes after Sri Lanka defaulted on its foreign debts in May, the first time this has happened in its history.

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