Sri Lanka’s Dissanayake scratches IMF revamp, sparking doubts on economic recovery

President Dissanayake has chosen to continue with the current IMF programme, raising concerns about its impact on economic growth and relief for the population

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Sri Lankan President Anura Kumara Dissanayake speaks to the new cabinet of Sri Lanka in Colombo on November 18. Photo: Department of Government Information-Sri Lanka/Xinhua

Published: 7:22pm, 29 Nov 2024Updated: 7:53am, 30 Nov 2024

Sri Lanka’s new leftist government, which won a landslide election earlier this month by promising to ease an austerity regime imposed by an IMF bailout, risks upsetting voters early into its term by following an unpopular debt repayment plan set by former president Ranil Wickremesinghe.

The National People’s Power (NPP), a coalition of left-wing parties, gained support amid frustration with Sri Lanka’s debilitating economic crisis and the spending cuts required by the US$2.9 billion International Monetary Fund (IMF) programme to bail out the country after it defaulted on its debt in 2022.

Years of deep financial crisis caused by a collapse of foreign currency reserves that drove the country into sovereign default has pushed many of Sri Lanka’s 22 million people to the brink with soaring costs for food, energy and medicine.

The IMF repayment terms, which included a cost recovery based on electricity pricing and a hike in VAT, drove up prices for everything from food to school supplies, ultimately leading to Wickremsinghe’s downfall.

In September, Anura Kumara Dissanayake became the country’s first leftist president, and went on to consolidate power as the NPP won a two-thirds majority in the snap general elections on November 14.

It promised to alleviate IMF austerity measures and create a stable, corruption-free social order.