Sri Lanka to begin talks with IMF to take forward $3.7b bailout, president says

COLOMBO - Sri Lanka's new President Anura Kumara Dissanayake said on Sept 25 that he plans to begin negotiations with the International Monetary Fund (IMF) immediately to take forward the country's US$2.9 billion (S$3.7 billion) bailout programme.

Millions of Sri Lankans voted the Marxist-leaning parliamentarian into office on Sept 21, drawn by his pledges to slash taxes, fight corruption and reduce the cost of living.

Mr Dissanayake aims to change the revenue goals set under the IMF programme to reduce high income taxes and free up funds to invest in welfare for millions of Sri Lankans hardest hit by its financial crisis.

"Additionally, to advance our debt restructuring program, we are negotiating with relevant creditors to expedite the process and secure necessary debt relief," Mr Dissanayake said, in a televised address, referring to an ongoing US$25 billion debt rework with creditors.

The IMF said on Sept 24 it would work with Mr Dissanayake and discuss the timing of its third review of the current programme with Sri Lanka "as soon as practicable".

Mr Dissanayake dissolved parliament on Sept 24 and is hoping to strengthen his hand in the 225-member house when a general election is held on Nov 14. His coalition held just three seats in the parliament elected in August 2020.

A severe shortfall of dollars spun Sri Lanka's economy into a deep financial crisis two years ago, sending inflation soaring to a high of 70 per cent in September 2022 and forcing the country to default on its foreign debt.

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