Sri Lanka to begin talks with IMF to take forward $2.9 bln bailout, president says

Sri Lanka’s new President, Anura Kumara Dissanayake, said he plans to begin negotiations with the International Monetary Fund (IMF) immediately to take forward the country’s $2.9 billion bailout program.

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

Dissanayake aims to change the revenue goals set under the IMF program 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,” Dissanayake said in a televised address referring to an ongoing $25 billion debt rework with creditors.

The IMF said on Tuesday it would work with Dissanayake and discuss the timing of its third review of the current program with Sri Lanka “as soon as practicable.”

Dissanayake dissolved parliament on Tuesday and hopes 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% in September 2022 and forcing the country to default on its foreign debt.