IMF to Review Sri Lanka's Loan Program Under New Administration

The International Monetary Fund (IMF) will discuss the next review of Sri Lanka's loan program with the new government led by President Anura Kumara Dissanayake. The IMF had paused the third review of a $2.9 billion facility due to the recent presidential election. Challenges remain for the new government in meeting IMF targets.

The International Monetary Fund (IMF) on Tuesday announced plans to discuss the timing of the next review of Sri Lanka's loan program with the newly installed government under President Anura Kumara Dissanayake.

In a statement, the Washington-based lender expressed optimism about collaborating with President Dissanayake's administration, emphasizing the importance of building on Sri Lanka's economic recovery gains since the 2022 crisis.

During the presidential election in July, the former government led by Ranil Wickremesinghe was in talks with the IMF for the release of the third tranche of the $2.9 billion facility. The IMF paused the disbursement of $360 million until post-election stability was assured.

The IMF said it would discuss the timing of the third review with the new administration at the earliest possible time.

The new government, established on Monday, expressed eagerness to engage with the IMF this week. Wickremesinghe had successfully negotiated an IMF bailout during Sri Lanka's worst economic crisis, which caused severe shortages of essential goods.

While the IMF approved the four-year facility with stringent reforms, India provided $4 billion in aid during the 2022-2023 crisis period. Implementing the IMF's conditions made Wickremesinghe unpopular, reflected in his third-place finish with 17% of the vote, compared to Dissanayake's leading 42%.

The new government now faces tough tasks, including finalizing a staff-level agreement for the next phase of the IMF program and assembling a budget that meets the program's objectives.

(With inputs from agencies.)