Sri Lanka is on the verge of securing a substantial loan worth $2.9 billion from the International Monetary Fund (IMF). This loan will be a part of a four-year bailout program offered by the IMF. There are rumors that the deal could take place on March 20th. The IMF was not willing to offer loans to Sri Lanka in the past, but now it appears that they are changing their stance after Sri Lanka secured funding from China.
China Provides Aid to Sri Lanka
The IMF's confirmation of the program with Sri Lanka comes at a time when the country has received promises from all its creditors. This will enable the country to get the necessary financial support to emerge from its recent financial crisis. Sri Lanka has never faced an economic situation like this since gaining independence from the UK in 1948.
Despite the challenging economic situation, the Sri Lankan President announced on Tuesday that the economy is showing signs of improvement. However, the country's foreign currency reserves are still insufficient for imports. The IMF program will make it easier for Sri Lanka to secure funding from other creditors.
Sri Lanka has already completed all the requirements to secure an IMF loan, and a major Chinese bank has shown support for the country. With these recent developments, hopes are high that the IMF board will approve the loan on March 20th. It is unlikely that the IMF board will add any items to the agenda that will lower the chances of receiving the loan.
However, if we look at the history of the IMF, there are not many countries that have benefited from IMF loans. Pakistan, for example, has gone to the IMF more than a dozen times and is still facing economic trouble.