IMF engaging with Sri Lanka’s new govt led by President Dissanayake on loan agreement for economic recovery

The International Monetary Fund (IMF) on Tuesday said it will discuss the timing of the next review of Sri Lanka's loan programme and looks forward to working with the new government headed by President Anura Kumara Dissanayake.

“We look forward to working together with President Dissanayake and his team towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery since entering one of its worst economic crises in 2022," the Washington-based lender said in a statement.

Former president Ranil Wickremesinghe-led government was negotiating with the IMF for the release of the third tranche of the USD 2.9 billion facility when the presidential election was announced in July.

The disbursement of around USD 360 million was anticipated after the third review which the IMF put on hold until the end of the election held last weekend.

“We will discuss the timing of the third review of the IMF-supported programme with the new administration as soon as practicable," the IMF said.

The new government, set up on Monday, said they were looking forward to being in touch with the IMF this week.

Wickremesinghe successfully negotiated the IMF bail-out when Sri Lanka suffered its worst-ever economic crisis leading to the shortage of essential commodities, including fuel and food.

The IMF approved the four-year facility subject to strict reforms.

Sri Lanka was aided by the Indian assistance worth USD 4 billion during the crisis between 2022 and 2023 when the IMF deal came through.

Wickremesinghe implemented most of the IMF conditionalities, making him unpopular with the voters.

He finished third with just 17 per cent of votes behind the 42 per cent by Dissanayake whose left party was the front-runner.

However, the island nation under the new government faces the challenge of reaching a new staff-level agreement on the next phase of the IMF programme and compiling a budget in line with its targets.

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