COLOMBO: Sri Lanka plans to finalize a staff-level agreement with the International Monetary Fund, President Anura Kumara Dissanayake said during the first sitting of the new Parliament on Thursday, maintaining the bailout program secured by his predecessor.
A delegation from the IMF is in Colombo for the third review of its $2.9 billion program ahead of releasing a new tranche of funds to Sri Lanka’s battered economy.
The IMF loan was negotiated by former President Ranil Wickremesinghe early last year. It required the Sri Lankan government to introduce austerity measures that led to price increases in food and fuel and caused hardship to millions of Sri Lankans.
Dissanayake, who assumed the top job in September and further consolidated his grip on power after his National People’s Power alliance won a majority in the legislature last week, had earlier promised to renegotiate the targets set in the IMF deal, because it placed too much burden on ordinary people.
But in his first speech to the inaugural session of Parliament, the president said the economy was “hanging by a thread” — too fragile to take risks.
A country of 22 million, Sri Lanka was hit by the worst economic crisis in its history in 2022, when its defaulted economy shrank by 7.8 percent and 2.3 percent last year.
“The reality in front of us now is that we have no time to check whether these agreements are beneficial or harmful to us, as these are the results of nearly two years of discussions,” he said.
“We cannot go forward if we continue through another two years to study and renegotiate the previous agreement.”
The agreement would allow the release of $337 million to Sri Lanka under the IMF’s four-year loan program. Dissanayake said he expected the agreement to be signed on Friday.
As he outlined his government policy to legislators, he vowed to keep his key election pledges of reducing taxes and increasing welfare programs without derailing the IMF program.
His government is scheduled to present the interim 2025 budget in February.
