Sri Lanka receives first tranche of IMF bailout | Business and Economy

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Rescue packages comes as Island nation is grappling with its worst economic crisis in 70 years.

Sri Lanka has received the first tranche of its bailout package from the International Monetary Fund (IMF), President Ranil Wickremesinghe told parliament.

“This sets the stage for Sri Lanka to have better fiscal discipline and improved governance,” Wickremesinghe said on Wednesday.

The first tranche of $330m comes after the IMF on Monday approved a $3bn rescue package for the crisis-stricken island nation.

Economic mismanagement and the fallout of the COVID-19 pandemic left Sri Lanka with a shortage of dollars for essential imports at the beginning of last year, plunging the country into its worst financial crisis since independence. The crisis has seen Sri Lankans grapple with soaring living costs, high income taxes of up to 36 percent and a 66 percent increase in power tariffs.

Al Jazeera’s Minelle Fernandez, reporting from Colombo, said earlier this week that the president intends to use the first tranche of IMF money in areas bearing the brunt of the crisis, including healthcare and tourism.

China, Sri Lanka’s biggest bilateral creditor, earlier this month agreed to restructure its loans to the country, clearing the final hurdle to receiving the bailout.

In an interview with the Reuters news agency on Wednesday, State Finance Minister Shehan Semasinghe said Sri Lanka would engage in restructuring talks with creditors to restore debt sustainability as “soon as possible”.

Sri Lanka has received 17 bailouts in its history, including three since the end of a decades-long civil war in 2009.