Sri Lanka completing pre-requisites for IMF aid

© Reuters. FILE PHOTO: Drivers push auto rickshaws in a line to buy petrol from a fuel station amid Sri Lanka’s economic crisis, in Colombo, Sri Lanka, July 29, 2022. REUTERS/Kim Kyung-Hoon

By Uditha Jayasinghe

COLOMBO (Reuters) -Sri Lanka is completing the pre-requisites to unlock a $2.9 billion bailout from the International Monetary Fund (IMF) and expects rapid approval from the global lender, President Ranil Wickremesinghe said on Saturday.

“We are successfully completing the difficult stage required to get support from the International Monetary Fund. We expect to get their consent without delay,” Wickremesinghe said in his address to the nation to mark the 75th Independence Day.

Sri Lanka, caught in the worst financial crisis since independence from Britain in 1948 triggered by a severe shortage of dollars, has seen steep inflation, a currency plunge and its economy slide into recession.

The island of 22 million people has also been hit by high taxes, a shortage of essential items such as medicine and fuel, and daily power cuts.

Wickremesinghe, who took over after his predecessor fled the country and resigned last year after thousands of protesters occupied his office and residence, has pledged to put the economy back on track but warned it will be an uphill task.

“I know that many of the decisions I have been compelled to take since assuming the presidency have been unpopular …. I will continue this new reform program with the majority of people who love this country,” he added.

Sri Lanka is currently focused on getting financing assurances from key bilateral creditors China and Japan. India, the third major creditor, agreed to support debt restructuring last month.

Sri Lanka’s central bank estimates an economic turnaround in the second half of 2023 and inflation to reach single digits by the end of this year.