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* Ranil Wickremesinghe’s Contribution to Securing an IMF Loan for Sri Lanka
Thu, May 25, 2023, 08:47 am SL Time, ColomboPage News Desk, Sri Lanka.

May 25 (The Diplomat) Sri Lankans are engaged in heated debate and discussion over whether President Ranil Wickremesinghe was a factor in their country securing IMF assistance.

Veteran columnist D.B.S. Jeyaraj has asserted that the “IMF program was made possible largely due to the untiring efforts of the President.”

On the other hand, Sri Lankan economist Umesh Moramudali said that “Ranil doesn’t own the IMF negotiations,” and that the “IMF negotiate with the government, not with Ranil on [an] individual basis.” Therefore, according to Moramudali, Wickremesinghe being the president of Sri Lanka did not swing the IMF decision in Colombo’s favor.

On March 20, the IMF approved a $3 billion Extended Fund Facility (EFF) to support Sri Lanka amid its economic crisis. The approval is expected to pave the way for other financial institutions to extend support to the bankrupt South Asian country.

The IMF links financial assistance to a country to policy reform, a conditionality that usually imposes political as well as economic changes in the recipient nation. The logic behind IMF conditionality is multifold. It is supposed to prevent moral hazard by governments that receive loans. These conditions allow the IMF to monitor the behavior of the recipient states and allegedly promote best practices and good governance.

Sri Lanka has been to the IMF 16 times before; five of these since 2000. The full amount of the IMF loan was not disbursed on six occasions because Sri Lanka did not fully comply with the conditions of the loans. This included the previous EFF in 2016, when the conditions imposed by the IMF built additional pressure on the domestic economy. There has been much skepticism about Sri Lanka adhering to the more stringent IMF conditions this time around.

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