The new financial assistance is aimed at restoring Sri Lanka’s macroeconomic stability and debt sustainability, according to a press release issued by the IMF. The IMF decided to extend the loan to Lanka following nine days of talks in Colombo.
“Considering the current situation, Sri Lanka’s financial sector should be declared a debt relief by their lenders to improve at least a little bit. “Lanka will be able to recover from the crisis only if it receives financial support from investors,” the press release said.
Sri Lanka needs to be assured that there will be concessions from the countries and organizations that have taken the loan. A co-operative agreement should be reached by convincing private creditors of repayment and giving them full confidence. The press release also stated that such things should be ensured before the IMF provides financial assistance.
According to the IMF, Sri Lanka has pledged efforts to increase revenue, eliminate subsidies, bring foreign reserves back to normal and maintain an exchange rate that adjusts to demand.
The unexpected financial crisis in Sri Lanka is literally shaking the country. As people took to the streets and led protests, President Gotabaya Rajapakse had to resign and leave the country. Renil Wickremesinghe is the new President of Lanka.
The Sri Lankan government currently has a debt of $51 billion. The country is unable to even pay the interest on the loan. The growth of the tourism sector, which was the main driver of economic growth, also slowed down. After the terrorist attacks in 2019, concerns regarding the security of the country were raised and the tourism sector was mainly affected by the Covid pandemic. The value of the rupee fell by 80 percent. Cost of import. The country ran out of money to import gasoline, milk, cooking gas and even toilet paper.
Experts believe that the corruption of politicians is the main reason for bringing the country to its current state. These people are responsible for wasting the country’s wealth.
Summary: IMF aid for Sri Lanka in the face of a financial crisis
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