IMF agrees to provide 2.9bn to Sri Lanka to help island nation overcome its worst economic crisis

International Monetary Fund (IMF) has agreed to provide a 2.9 billion dollar extended facility to Sri Lanka for a four-year period, with conditions on debt restructuring and action on corruption. The move comes after a week-long discussion between IMF and Sri Lankan authorities.

The IMF mission was led by Peter Breuer and Masahiro Nozaki who were in the island nation from August 24 to September 1. They extensively discussed IMF’s support for Sri Lanka and the authorities’ comprehensive economic reform programme. The new extended facility will support Sri Lanka’s program to restore macroeconomic stability and debt sustainability, IMF said in a statement.

Facing the worst-ever economic crisis, Sri Lanka is going through skyrocketing inflation, dollar crunch and devaluation of the local currency mainly due to wrong financial decision-making and extensive loans obtained for many white elephant projects.

With a colossal 51 billion dollar foreign debt, Sri Lanka was expected to pay 7 billion dollars in debt serving but defaulted in April this year.