Sri Lanka To Get 1st $330M Tranche Of IMF Bailout

Sri Lanka is set to receive the first $330 million tranche of the International Monetary Fund's (IMF) nearly $3 billion bailout meant to support the cash-strapped South Asian nation

ISTANBUL, (UrduPoint / Pakistan Point News - 22nd Mar, 2023 ):Sri Lanka is set to receive the first $330 million tranche of the International Monetary Fund's (IMF) nearly $3 billion bailout meant to support the cash-strapped South Asian nation.

In a statement late Tuesday, the IMF said the 48-month arrangement under the Extended Fund Facility (EFF) is "expected to catalyze a new external financial including from the Asian Development Bank and the World Bank." The IMF had on Monday approved a $2.9 billion bailout request for Sri Lanka, which defaulted on its foreign debt last April. The country is going through its worst financial crisis in decades because of economic mismanagement and impact of the COVID-19 pandemic.

It was the 17th IMF bailout for Sri Lanka and the third since its decades-long civil war ended in 2009.

According to Sri Lanka's presidential office, the program will allow the country to access financing of up to $7 billion from different international financial institutions.

"Sri Lanka has been facing a severe economic crisis as a result of past policy missteps and economic shocks," the global lender said. "We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups." Inflation in the debt-stricken nation rose to 53.6% in February, up from 53.2% in January, the statistics department said on Tuesday.

According to the IMF, Sri Lanka's public debt was at the 128% of its GDP as of end 2022, which is "unsustainable." "It is now important for the Sri Lankan authorities and creditors to closely coordinate and make swift progress toward the debt treatment that restores debt sustainability under the EFF supported program," the global financing body said.

It emphasized on the "importance of anti-corruption and governance reforms as a central pillar" of the financial assistance program.

The Sri Lankan rupee gained value against the US dollar after the IMF announcement.