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IMF approves $3bn bailout funds for debt-stricken Sri Lanka



The International Monetary Fund (IMF), has approved a first tranche of $330 million bailout funds for debt-ridden Sri Lanka in order to help the country put a rein on its debt to a sustainable level.

The funds which will be transmitted to the Asian country in two days, was approved by the global lender on Tuesday by the executive board of the bank.

The IMF‘s board said the “approval of nearly $3 billion bailout for Sri Lanka came with the endorsement expected to catalyse additional external support for the country to the tune of $3.75 billion from the likes of the World Bank, the Asian Development Bank and other lenders.”

A statement from the office of President Ranil Wickremesinghe, said the programme will enable the country to access up to $7 billion in overall funding.

READ ALSO:Sri Lankan President, wife flee country hours to announcing resignation

“Sri Lanka is no longer deemed bankrupt by the world. The loan facility serves as an assurance from the international community that Sri Lanka has the capacity to restructure its debt and resume normal transactions,” Wickremesinghe said in a video statement released by his office.

However, financial experts say the IMF funding will, however, not immediately help millions of Sri Lankans, who are being squeezed by soaring costs of living, high income taxes of up to 36% and a 66% increase in power tariffs, while the economy is expected to shrink by 3% this year after contracting 7.8% in 2022.

Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the start of last year, tipping the island nation into its worst financial crisis in seven decades, they say.

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