Sri Lanka Secures IMF Approval For Fourth Tranche Of $3 Billion Bailout Package

Sri Lanka’s new National People’s Power government on Saturday got the International Monetary Fund approval for a staff-level agreement to secure the fourth tranche of the nearly $3 billion bailout package.

“Once the review is approved by the IMF management and completed by the International Monetary Fund executive board, Sri Lanka will have access to about $333 million,” a statement issued by the global money lender here at the end of the third review said.

Altogether, the IMF has extended the island nation an Extended Fund Facility of $2.9 billion.

On Thursday, President Anura Kumara Dissanayake, who heads the NPP, affirmed his administration's commitment to continue the IMF bailout programme initiated by the previous government led by Ranil Wickremesinghe. Dissanayake, despite his pre-presidential election rhetoric to renegotiate with the global lender to water down tough conditions laid down for the recovery, backed the deal in his inaugural address to the newly convened parliament after his party's landslide victory in the parliamentary polls last week.

In the run-up to the September presidential election—at which Wickremesinghe was defeated—Dissanayake was critical of the bailout, especially its rigid reforms, which the party claimed made the then incumbent 75-year-old president unpopular.

Sri Lanka tapped the IMF for a facility at the height of the economic crisis under the presidency of Gotabaya Rajapaksa, the president who was made to flee the country by months-long public protests. Mid April of 2022 Sri Lanka announced its first-ever debt default.

The negotiations with the IMF began thereafter and the Wickremesinghe’s government clinched the bailout, a year later in March 2023.

On Saturday, the IMF said, “The new government’s commitment to the programme’s objectives has enhanced confidence and ensures policy continuity.” The IMF stressed that Sri Lanka’s reform agenda was delivering results. “The economy expanded on average by four per cent in the four quarters ending June 2024,” the Washington-based money lender said.

It said Sri Lanka reaching an agreement with private bondholders has put debt on a path of sustainability.

“The new government’s mandate will reinvigorate governance reforms addressing corruption risks, rebuilding economic confidence and making growth more robust and inclusive,” it added.

However, the debt restructuring agreement reached in the last week of the Wickremesinghe presidency is yet to be officially sealed. Debt restructuring agreement with both bilateral and sovereign bondholders was made compulsory to maintain debt sustainability by the IMF.

Earlier, Dissanayake met the IMF’s Sri Lanka mission chief Peter Breuer on Monday and urged to consider the economic hardships faced by the people and strike a balance in the economic recovery programme.