Sharjah 24 – AFP: Bankrupt Sri Lanka agreed a conditional $2.9 billion bailout with International Monetary Fund negotiators on Thursday, as the island nation seeks to overcome a bruising economic crisis that saw its president flee the country.
Months of acute food, fuel and medicine shortages, extended blackouts and runaway inflation have plagued the country after it ran out of dollars to finance even the most essential imports.
Sri Lanka has defaulted on its $51 billion foreign debt and in July angry protesters stormed the home of then-president Gotabaya Rajapaksa, with the leader subsequently fleeing the island and issuing his resignation from Singapore.
"This is an important step in the history of our country," said successor President Ranil Wickremesinghe of the IMF deal.
"The beginning will be difficult. But we know as we go on, we can make more progress. It is our commitment that matters now."
The IMF board will need to ratify Thursday's staff agreement, which is conditional on the Sri Lankan government striking a deal with creditors to restructure its borrowings.
Creditors needed to help Sri Lanka extricate itself from a "deep crisis" and return to servicing its debt, said the lender's head of mission Peter Breuer.
"It really is in the interest of all creditors to work with Sri Lanka on this front," Breuer told reporters, after nine days of talks with government representatives in Colombo.
"If creditors are not willing to provide these assurances, that would indeed deepen the crisis in Sri Lanka and would undermine its repayment capacity."
China -- Sri Lanka's biggest bilateral lender accounting for more than 10 percent of borrowings -- has so far not publicly shifted from its offer of issuing more loans instead of taking a cut on outstanding loans.
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