IMF reminds Sri Lanka of commitments against corruption after bailout

UPDATE DAY

The International Monetary Fund (IMF) warned Colombo on Tuesday not to let corruption get in the way of a $2.9 billion bailout package granted Monday to Sri Lanka, which has been met with mixed reception in the country . 

The validation of this bailout was conditioned in particular by guarantees from the Sri Lankan authorities in the fight against corruption, deeply rooted and held partly responsible for the serious economic difficulties of the country.

The agreement reached in early March with China for the restructuring of its loans to Sri Lanka also played in Colombo's favor and “opened the way” for this financing.

The head of the IMF mission in Sri Lanka Peter Breuer, however, recalled on Tuesday that the government had pledged to enact stricter anti-corruption laws in the coming months.

They are “essential to ensure that the hard-earned profits through reforms benefit the people of Sri Lanka,” he said.

Mr. Breuer added that the country would become the first in Asia to undergo a full “governance diagnostic” from the IMF.

In an official address, Sri Lankan President Ranil Wickremesinghe announced that this bailout would lift import bans on certain products, imposed due to a shortage of foreign exchange.

“The world has accepted that Sri Lanka is not no longer a country in bankruptcy”, he welcomed, adding that “normal business can resume”.

Sri Lankans seemed less enthusiastic.

“It's not something we should celebrate proudly,” Charlotte Somaseeli, 67, told AFP. “It's a sign of the desperate situation in which we are,” added this retired police officer.

“Basically, we're finished,” launched his side Gehard Mendis, 59-year-old entrepreneur. “The IMF plan is also a loan. This will increase our debt burden.”

Colombo had turned to the Washington-based monetary institution as a last resort, after defaulting in April 2022 on its $46 billion foreign debt (43 billion euros).

The country has since been mired in a serious economic and social crisis which, among other things, caused the resignation and flight of ex-president Gotabaya Rajapaksa.

His successor Ranil Wickremesinghe led negotiations with the IMF promising tough reforms to regain control of national finances.