Sri Lanka says financial woes ‘gradually’ easing

Sri Lanka has seen months of civil unrest at the peak of the economic crisis, culminating in the ouster of then-president Gotabhaya Rajapaksa

Sri Lanka is “gradually” coming out from its worst financial woes after the austerity of an International Monetary Fund (IMF) bailout, the president said Sunday in a speech to mark Independence Day.

Recalling the “indignity of being labeled a financially bankrupt country,” President Ranil Wickremesinghe dispensed with the customary annual address in favor of a brief statement.

The island nation defaulted on its $46 billion foreign debt in 2022 after a foreign exchange wipeout left it unable to import food, fuel and other essentials.

Sri Lanka saw months of civil unrest at the peak of the economic crisis, culminating in the ouster of then-president Gotabhaya Rajapaksa when thousands of protesters stormed his home.

IMF released the first tranche of a $2.9 billion four-year bailout loan to Sri Lanka in March last year under a reform program that saw taxes raised and prices sharply increased.

“Throughout this journey, challenges will gradually dissipate, life’s burdens will lighten, the economy will fortify,” Wickremesinghe said.

Prices spiked over 6% last month after the government hiked taxes in line with IMF conditions to maintain the bailout loan, according to Central Bank of Sri Lanka data.

The 6.4 percent reading was well up from the 4.0% seen in December, according to the bank.

However, it is still less than a tenth of the levels seen at the height of the island’s financial crisis in 2022, when inflation peaked at nearly 70%.

“We must obtain insights from past mistakes and avoid their repetition,” Wickremesinghe said.

Source AFP