IMF to engage in talks with new Sri Lankan government led by president Dissanayake

Colombo:The International Monetary Fund (IMF) announced on Tuesday that it plans to initiate discussions with Sri Lanka's newly-formed government, led by President Anura  Dissanayake, regarding the timing of the next review of the country’s ongoing loan programme.

In a statement, the IMF expressed its eagerness to work with the new administration, stating, “We look forward to collaborating with President Dissanayake and his team to build upon the hard-fought progress that has helped steer Sri Lanka towards economic recovery since the severe financial crisis of 2022."
As per reports, the prior government, led by former President Ranil Wickremesinghe, had been negotiating with the IMF for the release of the third tranche of a 2.9 billion dollars loan facility when presidential elections were called in July. Disbursement of approximately 360 million dollars was expected to follow the third review, but the IMF paused the process pending the outcome of the election, which took place last weekend.

"We will discuss the timing of the third review of the IMF-backed programme with the new administration as soon as possible," the IMF confirmed.
President Dissanayake’s newly-formed government, established on Monday, stated that they anticipate engaging with the IMF later this week to discuss the loan programme.

Former President Wickremesinghe had successfully secured an IMF bailout during Sri Lanka's worst economic crisis, which had led to shortages of essential goods, including food and fuel. The IMF agreed to a four-year loan facility, contingent upon the implementation of strict economic reforms. During the crisis, India extended support to Sri Lanka, providing 4 billion dollars between 2022 and 2023.

Wickremesinghe's adherence to IMF conditions proved unpopular with voters, and he finished third in the election, securing only 17 percent of the vote. Dissanayake, representing a left-leaning party, won with 42 percent of the votes.

The new government now faces the challenge of finalising a new staff-level agreement with the IMF and developing a budget that aligns with the lender's targets.