IMF finally agrees to release $2.9 Billion for Bankrupt Sri Lanka

Sri Lanka’s economy is expected to shrink by 8.7% in 2022 with inflation rising above 60%, the IMF said.

IMF finally agrees to release $2.9 Billion for Bankrupt Sri Lanka. Bankrupt Sri Lanka will receive a conditional $2.9 billion bailout, the International Monetary Fund said Thursday, following a bruising economic crisis that saw the island nation’s president chased from the country.

Months of acute food, fuel and medicine shortages, extended blackouts and runaway inflation have plagued the country after it ran out of dollars to finance even the most essential imports.

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The country has defaulted on its $51 billion foreign debt and incensed protesters stormed the home of then-president Gotabaya Rajapaksa in July, with the leader subsequently fleeing the island and issuing his resignation from Singapore.

“Sri Lanka has been facing an acute crisis… disproportionately borne by the poor and vulnerable,” the IMF said in a statement after nine days of talks in the capital Colombo.

The IMF board will need to ratify Thursday’s staff agreement, which is conditional on the government striking a deal with creditors to restructure its borrowings.

Sri Lanka’s economy is expected to shrink by 8.7% in 2022 with inflation rising above 60%, the IMF said, adding that the impact is greatest on the poor and vulnerable.