THE International Monetary Fund (IMF) last Saturday (4) released the first tranche of a $1.5 billion (£1bn) bail- out for Sri Lanka, which is reeling after a government spending spree to meet poll promises.
The IMF said the formal approval of a 36-month loan under its Extended Fund Facility (EFF) will also help Sri Lanka secure another $650 million (£446m) in other multilateral and bilateral loans.
President Maithripala Sirisena’s administration sought an IMF bail- out immediately after taking power in January last year, but the fund turned down the request, saying the country’s reserves were at a comfortable level.
However, the government faced a balance of payments crisis after it implemented its election pledges of higher public sector salaries and lower fuel and utility prices.
The IMF noted that Sri Lanka’s economy was beginning to show signs of strain from an increasingly difficult external environment. It said Colombo must in- crease tax collection and ensure exchange rate stability.