The International Monetary Fund (IMF) loan facility to Sri Lanka, approved in mid-2016, has been suspended by the global finance body due to the prevailing political crisis in Sri Lanka.
The loan facility approved Rs. 1.85 billion for Sri Lanka, on the condition of comprehensive economic reforms.
With the unprecedented political turmoil, which began with Mahinda Rajapaksa’s ascension to the post of Prime Minister, the IMF has suspended its loan facility. After assuming office as the Finance Minister of purported government, Mahinda Rajapaksa said the fuel price formula, introduced as part of the economic reforms programme in consultation with the IMF, would be scrapped with immediate effect.
As the purported government has failed to secure a Parliamentary majority, it is unlikely that a budget for 2019 will be presented to Parliament, this month.
Speaking to media two weeks before the political crisis in Sri Lanka, Chief for Sri Lanka Manuela Goretti, said, “Sri Lanka would need a strong 2019 Budget, aiming at further fiscal consolidation, to secure debt on a sustainable downward path and support investor confidence as large debt repayments are coming due.”