Sri Lanka’s newly elected president, Anura Kumara Dissanayake, has declared his intention to renegotiate the country’s controversial $2.9 billion bailout package from the International Monetary Fund (IMF). Dissanayake, the first leftist to assume the presidency, has expressed a desire to amend the terms of the deal, which has been criticized for its stringent austerity measures.
Despite his reservations, Dissanayake has assured that his government will not completely abandon the IMF program. A senior advisor to the president, Bimal Ratnayake, confirmed that they will engage with the IMF to introduce certain changes. “We will not tear up the IMF program. It is a binding document, but there is a provision to renegotiate,” he stated.
Dissanayake’s predecessor, Ranil Wickremesinghe, had doubled income taxes and imposed high sales taxes on essential goods. The new president has promised to reverse these policies, aiming to reduce the financial burden on the Sri Lankan people. “We think we can get those reductions into the program and continue with the four-year bailout program,” Ratnayake said.
The IMF has expressed its willingness to work with the new administration. An IMF spokesperson in Washington stated, “We look forward to working together with President Dissanayake… towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery.” The lender of last resort acknowledged that Sri Lanka has shown signs of stabilization since the bailout began, following a severe economic crisis that led to a default on its debt in April 2022.
The IMF’s willingness to renegotiate provides a glimmer of hope for Sri Lanka’s economic recovery. However, the negotiations are likely to be complex, with the IMF seeking to maintain the program’s effectiveness and Sri Lanka striving to alleviate the financial pressures faced by its citizens. The outcome of these discussions will have significant implications for the country’s economic future.
