Source: AFP
The International Monetary Fund is ready to discuss Sri Lanka’s controversial $2.9 billion bailout with the country’s new government, a spokesman said.
Anura Kumara Dissanayake, sworn in on Monday as the country’s first leftist president, said he wanted to renegotiate the deal, which brought unpopular austerity measures.
“We look forward to working with President Dissanayake… to capitalize on the lucrative gains that have helped put Sri Lanka on an economic recovery path,” an IMF spokesman said in Washington on Monday.
The lender of last resort noted that the South Asian nation, which filed for bankruptcy in April 2022, had stabilized since the bailout.
“We will discuss the timing of the third review of the IMF-backed program with the new government as soon as possible,” the spokesman said, referring to the periodic review of the bailout.
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A senior aide to the new president told AFP a day after the election that his party, the People’s Liberation Front, “will not tear up” the IMF deal.
“Our plan is to work with the IMF and introduce some amendments,” said Bimal Ratnayake.
“We will not tear up the IMF program. It is a binding document, but there is provision for renegotiation.”
Sri Lanka’s tiny stock market fell sharply in the first minutes of trading on Monday when Dissanayake took office, but quickly recovered to end the day with the main share price index 1.19 percent higher.
Dissanayake has pledged to cut income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also cut sales taxes on food and medicine.
“We believe we can fit these reductions into the program and continue with the four-year bailout,” Ratnayake said.
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Dissanayake’s opponents had raised fears that his Marxist party would scrap the IMF program and push the country back into an economic crisis similar to the chaos of 2022.
A currency crisis led to shortages of essential goods that sparked street protests that eventually forced then-leader Gotabaya Rajapaksa to flee the country and resign.
Source: AFP
