Tuesday, May 21, 2024

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IMF’s US$2.9 billion bailout loan catalyses multilateral financing

By: Staff writer

Colombo (LNW): Sri Lanka is pinning hopes on the International Monetary Fund’s (IMF) US$2.9 billion bailout loan within weeks following its executive board approval granted on Monday for the country’s economic reform program under the Extended Fund Facility (EFF).   

The economic reform program will be a catalyst for the island nation to access financing of up to US$7 billion from the IMF, and multilateral financial agencies such as the World Bank, ADB, Asian Infrastructure Investment Bank (AIIB), European Investment Bank; OPEC Fund for International Development; Nordic Development Fund etc.

For the first time in months, Sri Lankans are hopeful that the IMF’s decision will kick-start the country’s recovery from its worst economic crisis since independence from Britain in 1948.

Investors are betting that the country will make use of its considerable economic potential together with efforts to boost economic resilience and move toward greater integration with regional and global markets.

It has a strong base of human capital and reliable infrastructure. It also occupies a strategic position in Asia, the fastest growing region in the world, and investments over the last decade (particularly in ports and other transport-related facilities) can take advantage of this opportunity.

President Ranil Wickremesinghe has expressed his gratitude for the support of the IMF and other international partners soon after the country received the confirmation of IMF executive board approval.

President is committed to full transparency in all discussions with financial institutions & creditors, & to achieve sustainable levels of debt through prudent fiscal management & an ambitious reform agenda, presidential media division announced.

Minutes after hearing the IMF Board approval for around US$ 3 billion funding under EFF, former finance minister Ravi Karunanayake noted that this augurs well for the country’s progress in achieving durable economic growth and external sustainability.

This is the beginning of economic diversification efforts of the President Ranil Wickeremasinghe to sustain growth over time and make it more resilient and inclusive, he added.

He also stressed the urgent need of proposed the commercialization of some of the   State-owned enterprises (SOEs) including Sri Lankan Airlines, SriLankan Airlines, Sri Lanka Telecom, Colombo Hilton, Waters Edge and Sri Lanka Insurance Corporation  Water Supply and Drainage board, Ceylon Petroleum Coperation, Ceylon Electricity Board and Road Development Authority.

The United States of America has welcomed the approval of Sri Lanka’s IMF package “Great news & an important step on the road toward economic recovery,” tweeted US Ambassador to Sri Lanka Julie Chung on Monday (20).

She said that the Sri Lankan government will need to continue reforms and conclude debt restructuring agreements to ensure the program – and the economy – stay on track.

She noted that structural & lasting reforms that address good governance & transparency are critical to ensure all citizens of Sri Lanka can prosper.

IMF Managing Director Kristalina Georgieva also noted that she was very pleased the Executive Board of the IMF had approved about $3 bn of IMF support for Sri Lanka’s economic policies & reforms. She said that it was an important milestone with International Creditors coming together to help to restore debt sustainability. “Crucial to unlock Sri Lanka’s growth potential,” she added.

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