Sri Lanka must not allow entrenched corruption to undermine a bailout forits bankrupt economy, the IMF said Tuesday after signing off on a $3billion loan for the crisis-hit nation.
The International Monetary Fund approved its long-delayed rescue programmeon Monday after China, the South Asian nation’s biggest bilateral lender,offered debt relief assurances.
But the Fund said the rescue was conditional on tackling the deep-rootedculture of graft and government mismanagement blamed for tipping Sri Lankainto an unprecedented economic crisis last year.
Peter Breuer, the IMF mission chief in Sri Lanka, said the government hadagreed to enact tougher anti-corruption laws within months during thebailout negotiations.
“We emphasise the importance of anti-corruption and governance reforms as acentral pillar of the programme,” he told reporters.
“They are indispensable to ensure the hard-won gains from the reformsbenefit the Sri Lankan people.”
President Ranil Wickremesinghe said the rescue package would allow thegovernment to wind back import bans on various commodities that had beenimposed to shore up foreign exchange reserves.
“The world has accepted that Sri Lanka is no longer a bankrupt country,” hesaid in a national address. “Normal transactions can resume.”
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Sri Lanka went to the Washington-based lender of last resort shortly beforedefaulting on its $46 billion foreign debt last April.
A critical shortage of foreign exchange had left the island nation unableto finance even the most essential imports, causing severe food and fuelshortages.
Sri Lanka’s 22 million people also endured runaway inflation and prolongedblackouts, inflaming public anger as the crisis worsened.
Huge protests against economic mismanagement and government corruptioneventually forced then-president Gotabaya Rajapaksa to flee the country andresign in July.
Rajapaksa belongs to a powerful political family accused of squanderingpublic money on vanity projects backed by unsustainable loans from China,which owned around 10 percent of Sri Lankan debt.