COLOMBO, Sept 1: After a week-long discussion with Sri Lankan authorities, the International Monetary Fund (IMF) has agreed to provide a $2.9 billion extended facility for a four-year period, with conditions on debt restructuring and action on corruption. The IMF mission 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 EFF arrangement will support Sri Lanka's program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka's growth potential," the IMF announced in a statement.
Facing the worst-ever economic crisis since Sri Lanka gained independence from Britain in 1948, the island nation 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 foreign debt, the country was expected to pay $7 billion in debt serving but defaulted in April this year.
"Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic. The April debt moratorium led to Sri Lanka defaulting on its external obligations, and a critically low level of foreign reserves has hampered the import of essential goods, including fuel, further impeding economic activity," the IMF officials said in a joint statement on Thursday. (IANS)
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