IMF approves
Context: – Sri Lanka’s request for a $2.9 billion bailout has been approved by the International Monetary Fund (IMF) on March 20.
- The package of special drawing rights of about $3 billion will be available over 4 years.
- The Executive Board’s decision will enable immediate disbursement of $333 million.
- With the approval of the much-awaited bailout, Sri Lanka will restore macroeconomic stability and debt sustainability while carrying forward structural reforms.
- Stabilizing Sri Lanka’s economy and achieving sustainable debt levels has been a priority since Ranil Wickremesinghe took office last July.
- The IMF facility will enable Sri Lanka to access finance from the markets and other lending institutions such as the ADB and the World Bank.
- Sri Lanka was hit by an unprecedented financial crisis in 2022 due to a severe shortage of foreign exchange reserves, the worst since its independence from Britain in 1948.
Aim of bailout package
- To boost government revenue,
- Encourage fiscal consolidation,
- Introduce new pricing for fuel and electricity,
- Hike social spending,
- Bolster central bank autonomy,
- Rebuild depleted foreign reserves
- To reach a primary surplus of 2.3% of GDP by 2024.
About International Monetary Fund (IMF)
- It is an international organization that promotes global economic growth and financial stability, encourages international trade, and reduces poverty.
- It was established in 1944 in the aftermath of the Great Depression of the 1930s.
- It is an organization of 190 member countries.
- It is governed by and accountable to 190 countries.
- India became its member in December 1945.
- The IMF’s resources come mainly from money that countries pay in as their capital subscriptions (quotas) when they become members.
- The International Monetary Fund’s executive board comprises 24 members.
- Managing Director – Kristalina Georgieva (Bulgaria)
- Headquarter (HQ) – Washington, D.C., US
IMF approves
