IMF set to provide $2.9 billion to help crisis-hit Sri Lanka

COLOMBO, Sri Lanka (AP) — The International Monetary Fund announced Thursday it has reached a preliminary agreement to provide Sri Lanka with $2.9 billion over four years to help it recover from its worst economic crisis.

The arrangement will help restore financial and macroeconomic stability and debt sustainability as well as enable the country's growth potential, an IMF team visiting Sri Lanka said in a statement.

The package is contingent on approval from the IMF management and executive board, as well as on receiving assurances from Sri Lanka's creditors, which include China, India and Japan, that debt sustainability will be restored.

Speaking to reporters in Colombo, the IMF's Peter Breuer said that since Sri Lanka's debt is currently unsustainable, the lender will need to see an engagement between the country and its creditors before it can commit resources.

“If creditors are not willing to provide these assurances, that will deepen the crisis in Sri Lanka and would undermine its repayment capacity,” he said.

He said a collaboration between the creditors and Sri Lanka will help the nation emerge from the crisis faster, and suggested holding a forum between the two sides on restructuring its debts.

Sri Lanka is in the midst of an unprecedented economic crisis with acute monthslong shortages of essentials such as fuel, medicine and cooking gas due to a severe shortage of foreign currency.

Though cooking gas supplies were restored through World Bank support, shortages of fuel, critical medicines and some food items continue.

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