IMF Managing Director Kristalina Georgieva said that a $3 billion extended loan facility announced Tuesday would help Sri Lanka's economic recovery but warned that it was critical that there was no let up in ongoing efforts to tackle corruption, including the revamping of anti-corruption legislation. File Photo by Bonnie Cash/UPI | License Photo
March 21 (UPI) -- Sri Lanka has secured an international bailout to help restructure its $95 billion debt mountain as it wrestles with the worst economic crisis in the 75 years since gaining independence from Britain, the IMF announced Tuesday.
The fund said the objectives of the $3 billion Extended Fund Facility were to restore macroeconomic stability and debt sustainability, safeguard financial stability, and step up structural reforms that would unlock Sri Lanka's growth potential.
It stressed that the measures took account of the need to protect the most vulnerable and improve governance.
The fund's executive board said its decision unlocks $333 million of the facility for immediate disbursement and would catalyze financial support from other development partners.
"The IMF program will be imperative to improving Sri Lanka's standing in and access to international capital markets, and it will demonstrate that Sri Lanka is once again a country attractive to talent, investors and tourists," Sri Lankan President Ranil Wickremesinghe said in a Twitter post.
He said his government aimed to get the economy back on track for the long term through prudent fiscal management and an ambitious reform agenda.
Wickremesinghe, who served six terms as prime minister, came to power in July when former president Gotabaya Rajapaksa was ousted and fled to Singapore after his mismanagement of the economy saw the country spiral into a humanitarian crisis, a brutal crackdown on unrest and default on its debt.
IMF Managing Director Kristalina Georgieva said that "swift and timely implementation" of the program is "critical" to helping Sri Lanka overcome the crisis and that "ambitious revenue-based fiscal consolidation is necessary for restoring fiscal and debt sustainability while protecting the poor and vulnerable."
"Sri Lanka has been facing tremendous economic and social challenges with a severe recession amid high inflation, depleted reserves, an unsustainable public debt, and heightened financial sector vulnerabilities. Institutions and governance frameworks require deep reforms," said Georgieva.
Georgieva called for the momentum of ongoing progressive tax reforms to be maintained and the strengthening and more focused targeting of social safety nets for poor people.
She said that for the fiscal adjustments to be successful, reforms of tax administration, public finance and expenditure management, and energy pricing were critical.