Sri Lanka IMF bailout

But is the governance diagnostic exercise just another tool to legitimize its austerity measures?

The IMF’s $2.9 billion EFF program lays out major structural reforms required to restore long-term macroeconomic stability in Sri Lanka. 

The country has the dubious distinction of being the first Asian country to face scrutiny for corruption as part of a bailout program.

The government says it was compelled to raise taxes to strengthen state revenue, a key prerequisite to unlocking the $2.9 billion IMF package.

Sri Lanka hosted two high-level delegations from the U.S. in February – including one that opposition parties say was cover for a secret mission by the head of the CIA.

Beijing is resisting cuts to Sri Lanka's debts for fear other borrowers will want similar relief.

Government doctors, university teachers, and other workers from ports and the power and petroleum sectors are calling on the government to lower income taxes.

Instead, it should retrain its soldiers and redeploy them in policing, peacekeeping, and disaster rescue and relief roles.

Sri Lanka’s debt restructuring is deeply embedded both within a global emerging market debt crisis and a moment of rethinking within China about its global role as a creditor. 

Once again, the country is forced to seek a bailout from the IMF – with all the costs and benefits that entails.

The package is contingent on assurances from creditors, including China, India and Japan that debt sustainability will be restored.