The International Monetary Fund (IMF) has approved financial assistance of USD 3 billion to Sri Lanka to aid the nation's ongoing economic crisis.
The assistance will be provided under the
Extended Fund Facility (EFF) and will span over 48 months. According to the IMF
statement, the support is intended to revive Sri Lanka's macroeconomic
stability and debt sustainability, minimize the negative economic impact on the
most impoverished and vulnerable segments of the population, strengthen
governance and growth potential, and maintain financial sector stability.
The decision
by the IMF’s Executive Board would immediately release a disbursement
equivalent to SDR 254 million, approximately USD 333 million, and would spur
financial assistance from other development partners. Sri Lanka has faced a
catastrophic economic and humanitarian crisis, accentuated by policy missteps
and pre-existing vulnerabilities, that was further compounded by a series of
external shocks.
Earlier this year, Sri Lanka defaulted on its
debt for the first time in history, which led to public protests. To mitigate
the situation, the nation has implemented measures such as tax hikes and
utility rate hikes, which have been met with protests and opposition by trade
unions and other groups.
In another
development, European Union (EU) ministers have decided to invest EUR 2 billion
to jointly acquire desperately needed artillery shells for Ukraine. The plan
involves buying one million shells in the next year, along with replenishing
the EU’s depleted stocks. Ukraine has been requesting 350,000 shells a month to
counter Moscow's invasion, which has resulted in a year-long war of attrition.
The EU countries aim to send the first
shipment of shells to Ukraine by the end of May, while the joint contracts are
expected to be signed by the start of September. The EU’s new initiative for
joint procurement aims to incentivize defence firms to increase production.
The plan has
two parts: one commits a further EUR 1 billion of shared funding to encourage
EU states to use their existing stretched ammunition stocks and quickly send
them to Ukraine, while the other would use another EUR 1 billion to purchase
155-millimetre shells for Ukraine.
Diplomats say that the ambition to provide one
million rounds over the next year may not be feasible, given that EU nations
will have to consume their own stockpiles. EU companies will have to switch to
"war economy mode" to boost production, as the Ukrainian consumption
of ammunition currently outstrips that of its Western backers.
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