The International Monetary Fund has approved a nearly $3 billion financial rescue package for Sri Lanka after several months of negotiations with the economically troubled South Asian island nation.
The IMF announced Monday that it will immediately release about $333 million to Colombo. The institution said Sri Lanka must undertake a set of economic reforms and anti-corruption strategies as part of the bailout agreement.
The rescue package was approved only after China, India and Japan, Sri Lanka’s biggest international creditors, agreed to a debt restructuring strategy.
Sri Lankan President Ramil Wickremesinghe’s office issued a statement saying the agreement will bring in up to $7 billion from the IMF and other international financial institutions. President Wickremesinghe has already pushed through a number of economic reforms, including raising income taxes and ending generous subsidies for fuel and electricity.
Sri Lanka’s tourism-dependent economy was devastated by the COVID-19 pandemic, as well as a set of disastrous decisions made by former President Gotabaya Rajapaksa, which depleted its foreign exchange reserves and left it unable to import food, fuel or medicines. Sri Lankans had to endure days of lengthy power outages
The crisis sparked a popular and often violent uprising that led Gotabaya Rajapaksa to flee Sri Lanka and resign from office, effectively ending his family’s two-decade hold on political power. His brothers Mahinda and Basil also quit their posts as prime minister and finance minister, respectively, amid the anti-government demonstrations.
Some information for this report came from The Associated Press, Reuters, Agence France-Presse.