COLOMBO: The International Monetary Fund is ready to discuss its controversial $2.9 billion bailout program for Sri Lanka with the country’s new government, a spokesman said.

Anura Kumara Dissanayake, sworn in Monday as the country’s first leftist president, has said he wants to renegotiate the deal, which has brought unpopular austerity measures. “We look forward to working together with President Dissanayake... towards building on the hard-won gains that have helped put Sri Lanka on a path to economic recovery,” an IMF spokesperson in Washington said Monday.

The lender of last resort noted that the South Asian nation, which defaulted on its debt in April 2022, had stabilized since the bailout. “We will discuss the timing of the third review of the IMF-supported program with the new administration as soon as practicable,” the spokesperson said referring to the periodic review of the bailout.

A senior aide of the new president told AFP a day after the election that his People’s Liberation Front party will “not tear up” the IMF deal. “Our plan is to engage with the IMF and introduce certain amendments,” Bimal Ratnayake said. “We will not tear up the IMF program. It is a binding document, but there is a provision to renegotiate.” Sri Lanka’s tiny stock market fell sharply within the first few minutes of trading on Monday, when Dissanayake took office, but recovered quickly and ended the day with the main All Share Price index 1.19 percent higher.

Dissanayake has pledged to reduce income taxes that were doubled by his predecessor Ranil Wickremesinghe, and also slash sales taxes on food and medicines. “We think we can get those reductions into the program and continue with the four-year bailout program,” Ratnayake said.

Dissanayake’s rivals had raised fears that his Marxist party would scrap the IMF program and push the country back into an economic crisis similar to the chaos of 2022. A foreign exchange crisis led to shortages of essentials sparking street protests which eventually forced then leader Gotabaya Rajapaksa to flee the country and resign. — AFP