Sri Lanka leader warns hard times to follow IMF bailout

Reuters :
Sri Lanka’s president warned on Wednesday of more economic pain to come for the crisis-hit nation, with strict austerity measures needed to restore its ruined finances after an IMF bailout deal.
The International on Monetary Fund approved its long-delayed rescue package on Monday after China, the South Asian island’s biggest bilateral lender, offered debt relief assurances.
President Ranil Wickremesinghe lauded the deal in a speech to parliament as a milestone in Sri Lanka’s recovery from last year’s unprecedented economic crisis.
But he also told lawmakers that the bailout was only the first step in more difficult structural reforms.
“The IMF loan is not an end in itself, this is the beginning of a long and more difficult journey,” Wickremesinghe said.
“We have to traverse it with care and courage. The only objective is to rebuild the economy.”
Sri Lanka defaulted on its $46 billion foreign debt last April after nearly exhausting its foreign exchange reserves, making it almost impossible for importers to source vital goods.
The island nation’s 22 million people endured months of food and petrol shortages, along with runaway inflation and prolonged blackouts, as a result.
Wickremesinghe has sought to restore government coffers by sharp tax hikes and ending generous consumer subsidies on fuel and electricity.
On Wednesday he said more taxes were on the cards to meet the IMF’s demand that Sri Lanka halve its spend on foreign debt servicing from the 9 percent of GDP recorded last year.