The International Monetary Fund (IMF) on Tuesday warned Colombo corruption may thwart a $2.9 billion aid package granted to Sri Lanka on Monday, which has received a mixed reception in the country.
The validity of this bailout was conditioned in particular by guarantees by the Sri Lankan authorities in the fight against corruption, which is deeply rooted and blamed in part for the country’s serious economic difficulties.
The agreement reached with China in early March on the restructuring of its loans to Sri Lanka also played in Colombo’s favor and “paved the way” for this financing.
However, the head of the IMF mission in Sri Lanka, Peter Breuer, recalled on Tuesday that the government had pledged to enact stricter anti-corruption laws in the coming months.
They are “essential to ensure that the hard-won benefits of the reforms reach the people of Sri Lanka,” he said.
Mr Breuer added that the country will be the first in Asia to undergo a comprehensive “governance diagnosis” by the IMF.
In an official speech, Sri Lankan President Ranil Wickremesinghe announced that this bailout plan would lift import bans on certain products imposed due to foreign exchange shortages.
“The world has accepted that Sri Lanka is no longer a bankrupt country,” he said, adding that “normal business can resume”.
The Sri Lankans seemed less enthusiastic.
“It’s not something we should be proud of,” Charlotte Somaseeli, 67, told AFP. “It is a sign of the desperate situation we are in,” added the retired police officer.
“Basically, we’re done for,” said Gehard Mendis, a 59-year-old entrepreneur. “The IMF plan is also a loan. This will increase the weight of our debt.
Colombo had turned to the Washington-based monetary institute as a last resort after it defaulted on its $46 billion foreign debt in April 2022.
Since then, the country has been in a severe economic and social crisis, which among other things led to the resignation and flight of ex-president Gotabaya Rajapaksa.
His successor, Ranil Wickremesinghe, conducted negotiations with the IMF and promised tough reforms to regain control of public finances.