The International Monetary Fund approved a $3 billion loan programme for Sri Lanka, a crucial step for the bankrupt nation to stabilise its economy and begin restructuring its debt.
The lender’s executive board approved the 48-month programme in Washington yesterday, and said it will include an immediate disbursement of about $333 million.
“Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis,” the IMF said in a statement. “The economy is facing significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead up to the crisis, further aggravated by a series of external shocks.”
The bailout will inject much-needed funding for a nation grappling with soaring prices, supply shortages and eroded foreign-currency reserves after defaulting on its overseas debt last year.
The focus will turn next to debt talks, which Fitch Ratings has said may drag on as creditors debate whether to include local-currency sovereign borrowing in the restructuring. The rating company cut its score on rupee debt in December, saying a default was probable.
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