COLOMBO: Battling difficult fiscal and monetary conditions alongside an ongoing drought that is spiraling up inflation, Sri Lanka is set to face further prescriptions for austerity measures when the International Monetary Fund (IMF) Managing Director Christine Lagarde visits the country on March 21.

Following up to the International Monetary Fund’s loan of $1.5 billion and the sale of some state-owned assets by way of equity swaps, Lagarde, the first-ever IMF head to visit the country, is expected to impose further terms and conditions.

Mid 2016 the IMF approved a $1.5 billion loan to Sri Lanka, with $168 million disbursed in two tranches to support the country’s ailing economy.

The IMF stated that it aimed to meet the balance of payments needs arising from a ‘deteriorating external environment.’ It also maintained that economic pressures may persist until macroeconomic policies can be adjusted.

The visit of Lagarde to Sri Lanka comes in the wake of IMF recently stating that the government had missed key ‘benchmarks” which was scheduled to be implemented by December last year.

The loan approved for Sri Lanka in 2016, to be paid in 6 installments, was subject to the Lankan government meeting the IMF’s targets which focuses on restructuring state-owned enterprises by privatisation, slashing subsidies and increasing taxes.

Published in Dawn, March 4th, 2017