The International Monetary Fund (IMF) on Thursday announced its conclusion to give Sri Lanka a $2.9 billion loan.

The IMF said Sri Lankan authorities and IMF had reached a staff-level agreement to support Sri Lanka’s economic policies with a 48-month arrangement under Extended Fund Facility (EFF).

In a statement, the IMF said the new EFF arrangement would support Sri Lanka’s programme to restore macroeconomic stability and debt sustainability.

It added that the agreement would safeguard financial stability, reduce corruption vulnerabilities and unlock Sri Lanka’s growth potential amid a severe economic crisis.

“Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic,” the IMF said.

It added that the country’s economy was expected to contract by 8.7 per cent in 2022, and inflation recently exceeded 60 per cent. The impact has been disproportionately borne by the poor and vulnerable.

“Against this backdrop, the authorities’ programme, supported by the Fund, would aim to stabilise the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promote sustainable and inclusive growth,” the IMF said. 

Sri Lanka is presently facing one of its worst economic crises as the country faces a shortage in foreign currency, leading to a shortage in essential supplies such as fuel, medicines and even food items. 

(Xinhua/NAN)