IMF to provide Sri Lanka $350 million after fourth review of bailout
Amid the island's unprecedented economic crisis, the International Monetary Fund (IMF) in March 2023 approved a nearly $3 billion facility to assist Sri Lanka's 'efforts to durably restore macroeconomic stability by restoring fiscal and debt sustainability.
The facility helped Sri Lanka revive its bankrupt economy by building its reserves and successfully negotiating debt restructuring with external creditors.
'The Executive Board of the International Monetary Fund (IMF) completed the Fourth review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing the authorities to draw SDR254 million (about $350 million)," the global lender said in a statement.
This brings the total IMF financial support disbursed so far to SDR1.27 billion (about $1.74 billion).
The reforms that were imposed on the IMF's insistence have led to economic hardships, which the global lender said were a must to ensure growth and stability.
The unpopular measures led to the change of government in 2024. The current government led by the National People's Power, which had been critical of the IMF-prescribed reforms and had vowed to review them, continues to stay on course with the IMF programme.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India Today
4 hours ago
- India Today
Why only someone very ignorant can think that Indian economy is dead
India's economic ascent in recent years has positioned it as a global powerhouse, standing tall amidst a turbulent world economy. With a unique blend of robust GDP growth, stable macroeconomic fundamentals, and strategic sectoral advancements, India is not only the fastest-growing major economy but also one of the most resilient. There are several key drivers behind India's economic strength, supported by compelling data points and emerging opportunities that underscore its enduring momentum. An honest perusal of these key parameters will exorcise the farcical claim by India's Leader of Opposition (LoP) that the Indian economy is dead. What will emerge is a picture to the GDP Growth and Global StandingIndia's GDP growth has consistently outpaced that of other major economies, cementing its status as a global economic leader. In FY24, India's real GDP grew by an impressive 8.2%, surpassing the growth rates of major economies like the United States (2.5%), China (5.2%), Japan (1.9%), and Germany (0.3%). For FY25, the International Monetary Fund (IMF) projects India's growth at 6.5–7%, revised upward from 6.6% due to strong rural demand and government infrastructure spending. This makes India the fastest-growing major economy, with projections indicating it will maintain this position through FY26, with GDP growth expected between 6.3–6.8%.By 2027, India is forecasted to overtake Germany to become the world's third-largest economy, with a projected GDP of $5.2 trillion. By 2030, this figure is expected to reach $7.3 trillion, driven by robust domestic demand, a young demographic, and sustained economic reforms. India's contribution to global economic growth is projected to be 12.9% over the next five years, surpassing the United States' 11.3%. This trajectory highlights India's ability to thrive despite global headwinds, such as geopolitical tensions and trade PMI: A Beacon of Industrial Strength India's manufacturing sector is a cornerstone of its economic resilience, as evidenced by the S&P Global India Manufacturing Purchasing Managers' Index (PMI). In August 2023, the PMI stood at 58.6, reflecting robust expansion driven by strong demand, competitive pricing, and increased new orders—the fastest upturn since January 2021. For FY24, manufacturing growth reached 9.9%, significantly contributing to Gross Value Added (GVA) growth of 7.2%. Most recently, the PMI showed robust growth, with a high of 59.2 in July 2025, marking the highest reading in nearly 17.5 years, reflecting strong demand and performance underscores India's growing industrial capacity, bolstered by initiatives like the Production Linked Incentive (PLI) Scheme, which has attracted investment in pharmaceuticals, electronics, and global supply chain disruptions, India's manufacturing sector has shown remarkable adaptability. The sector's contribution to GDP, though currently at 13%, is poised for growth through policies like 'Make in India,' which aims to elevate it to 25%. Companies like Apple are shifting production to India, with iPhone manufacturing for the U.S. market increasingly moving from China. This trend signals India's emergence as a global manufacturing hub, enhancing its economic Inflation: A Pillar of Economic StabilityIndia's ability to maintain low inflation amidst global volatility is a testament to its prudent monetary policies. In March 2025, the Consumer Price Index (CPI) inflation rate was 3.34%, down from 4.85% the previous year. This decline, driven by stable food prices and lower crude oil costs (projected at $65/barrel in FY25), has bolstered purchasing power and economic stability []. The Reserve Bank of India's (RBI) steady interest rate policy and potential rate cuts of 25 basis points in FY25 further support growth by encouraging credit and to advanced economies grappling with high inflation—such as the U.S. (3.0% in mid-2023) and the Eurozone (5.3%)—India's low inflation rate provides a competitive edge, fostering consumer confidence and sustaining domestic demand []. This stability is crucial for long-term economic resilience, especially in a global environment marked by inflationary FDI Inflows: A Vote of Global ConfidenceForeign Direct Investment (FDI) inflows into India have surged, reflecting global confidence in its economic potential. Between April 2000 and December 2024, cumulative FDI equity inflows reached $1.05 trillion, with $71 billion recorded in FY24 alone. Key sectors like finance, banking, insurance, and R&D have been major recipients, with Maharashtra (31%) and Karnataka (21%) emerging as top destinations. Singapore, Mauritius, and the U.S. account for significant shares, with 25%, 24%, and 10% of inflows, liberalised FDI regime, allowing 100% foreign investment in sectors like construction and renewable energy, has been a game-changer. The rise of Indian unicorns—108 by mid-2023, with 44 achieving unicorn status in 2021—has further attracted global investors. However, a dip in net FDI to $0.35 billion in FY24 due to increased outward investments highlights the need for sustained policy efforts to maintain inflow momentum. Nonetheless, India's ability to attract substantial FDI underscores its appeal as a stable and lucrative investment Opportunities in Tier 2 and Tier 3 CitiesIndia's economic growth is not confined to metropolitan hubs; Tier 2 and Tier 3 cities are emerging as vibrant centers of opportunity. Cities like Jaipur, Indore, Surat, and Coimbatore are witnessing rapid infrastructure development, driven by initiatives like the UDAN regional airport scheme, which plans to build 20 new airports, and the Ganga Expressway, enhancing connectivity in Uttar Pradesh. These projects are unlocking economic potential by improving logistics, boosting tourism, and attracting Smart City Mission and Atal Mission for Rejuvenation and Urban Transformation are fostering sustainable urban development in these cities, creating jobs and stimulating local economies. For instance, Hyderabad's tier-4 data center, with 1,600 racks and 18MW capacity, highlights the growing digital infrastructure in Tier 2 cities. The public cloud services market in India is projected to reach $13 billion by 2026, with a CAGR of 23.1%, driven by demand in these regions. This decentralization of economic activity reduces regional disparities and enhances India's overall economic Shoots: Renewable Energy and Space TechnologyIndia's focus on green shoot sectors like renewable energy and space technology is propelling its economic transformation. In renewable energy, India is targeting 100 GW of solar capacity by 2025, alongside investments in wind, hydropower, and green hydrogen. The India Green Energy Corridor and Green Hydrogen Mission align with the goal of net-zero emissions by 2070, positioning India as a global leader in clean energy. Two-thirds of new energy consumption is expected to come from renewables, reducing reliance on imported fossil fuels and creating jobs in manufacturing and space technology, India's achievements, such as the Chandrayaan-3 lunar mission and the upcoming Gaganyaan human spaceflight program, have elevated its global standing. The Indian space sector is projected to grow from $8 billion in 2023 to $44 billion by 2033, driven by private-sector participation and government support []. Initiatives like the Indian Space Research Organisation's (ISRO) partnerships with startups are fostering innovation and economic diversification, further strengthening India's growth Pillars of ResilienceBeyond these key drivers, India's economic strength is bolstered by several other factors, such as India's Demographic Dividend. With 17.8% of the global population and a growing working-age cohort, India is set to overtake China's working-age population share by 2030. This demographic advantage fuels consumption and the Digital Transformation front, initiatives like IndiaStack and Aadhaar have digitised financial transactions, with the credit-to-GDP ratio expected to rise from 57% to 100% by 2031. This enhances financial inclusion and economic it comes to infrastructure push, the Modi government's record-breaking Rs. 11 lac crore capital expenditure in the last two successive financial years has driven projects like the Bharat Expressway and Sagarmala 2.0, improving connectivity and banking sector has shown remarkable stability, driven by reforms. Gross non-performing assets (NPAs) fell to a 12-year low of 2.6% in FY24, reflecting a robust financial and the Path ForwardDespite its strengths, India faces challenges, including a skills gap and a manufacturing sector that needs to further scale up. Structural reforms, such as those in agriculture and labour, are critical to sustaining high growth. The government's National Manufacturing Mission and focus on skill development aim to address these gaps, but consistent implementation is economy today is stronger and more resilient than ever, driven by robust GDP growth, a thriving manufacturing sector, low inflation, high FDI inflows, and burgeoning opportunities in Tier 2 and Tier 3 cities. Emerging sectors like renewable energy and space technology, combined with a favourable demographic and digital transformation, position India as a global economic leader. As it navigates challenges with strategic reforms, India's trajectory toward becoming the world's third-largest economy by 2027 is not just a possibility but an inevitability. With visionary governance and sustained momentum, India is poised to shape the global economic landscape for decades to come.(Tuhin A Sinha is a national spokesperson of the BJP, and an author)- Ends(Views expressed in this opinion piece are those of the author)Must Watch
Indian Express
6 hours ago
- Indian Express
A tribute to economist Shankar Acharya, A World in Flux, explores what needs to be done to achieve India's goal of becoming Viksit by 2047
A confession — I have known Shankar Acharya, a friend and fellow cricket junkie, far longer than he or I are willing to admit. It is an honour to review 'A World in Flux – India's Economic Priorities', a timely and deeply researched collection of essays in honour of Shankar's thinking and contributions. The book is about what change is needed to allow India to meet its tryst with a destiny that is viksit by its 100th anniversary in 2047. The contributors are much more than eminent scholars — they are acknowledged experts in their fields. The biggest — and the most well-deserved — tribute to Shankar is that the contributors have chosen to write a learned and expert commentary. Much of what they have written and advocated as policy is spot on, so what is a reviewer supposed to do? I can summarise the issues raised by the authors, but the editors, Amita Batra and AK Bhattacharya, provide a must-read analysis — a model introduction to a very distinguished economist, policy advisor and policy-maker. There has only been one major policy question on which Shankar and I have disagreed — and continue to disagree — and that is the danger that fiscal deficits pose to growth and inflation. He, of course, initiated India's long-term fiscal policy in the early 1980s, at a time when such a roadmap was very much needed. Before going further, I want to add that we have differences — differences that arise not out of a difference in expertise or analysis but differences in our genes. Shankar, by his own admission, gravitates towards pessimism; and when I have to err, I err on the side of my DNA++ disposition. The 'what should be done about fiscal deficits' debate is a good point ofdeparture for illustrating why 'yeh dil mange more' than offered by the experts in the volume. Does India have a high fiscal deficits problem or a problem of plenty, one which allows policy makers from doing nothing (at best) or actually implementing bad policies? Sajjid Chinoy in his tour de force essay ('Getting Rich Before Getting Old') speaks about raising India's tax/GDP ratio from an already high level of around 19 per cent today. It is quite the fashion among Indian commentators (I include myself in this galaxy) to point to China as a worthy example to follow — when in doubt, do what China does and thou shalt succeed. China's tax/GDP ratio of 14.5 per cent in 2024 suggests we should radically decrease our rate of taxation. But our experts do not advocate that. Why? India's fiscal problem is one oftoo high taxation, not too little. 'Easy' revenue allows the government (state and central) to indulge in ever more wasteful expenditure (freebies) which slows growth. Our slow growth, relative to potential, is the problem, not that fiscal deficits are causing inflation to be at a historic low. The IMF orthodoxy of 'when in doubt, raise tax revenue' is now hopelessly outdated. Another example of divergence between necessary policy, and one offered by experts, pertains to the low share of manufacturing (and even the ever lower share of manufactured exports). We all agree that something needs to be done, but what? One favourite solution (like raising the tax revenue) is to join the China-led RCEP. This is dictated by the specious reasoning that since China leads in manufactured export growth, by joining RCEP we will do so too. However, 13 of 15 RCEP countries have lower growth of manufactured exports than before (joining) RCEP. As far as policy analysis goes, why not note that our two 'global champions' — Ambani and Adani-led enterprises — produce zero manufactured goods (unless an intermediate good like polyester is considered a final manufactured good, like shirts)? And why, iflack of textile growth is a problem (it is!), our reform experts (except Amitabh Kant) don't point to the fact that a very very low hanging fruit is the reduction of high import duties on manmade fibres? Why don't the experts argue that the government should choose winners like Ambani and Adani? The government should appoint these global experts to lead the march on manufactured goods. Instead of Production Linked Incentives (PIL) we should have EIL — Export Linked Incentives. If subsidies are involved (as they will be), the government should provide them. Learn from China (again) how to sidestep WTO regulations. This is how Korea, China and the US have succeeded — we will succeed too. Bhattacharya also has a much-needed, must-read chapter on the political economy of reforms. AK notes that in the near-50-year history of economic reforms in India, an important pattern emerges. 'But once the immediate economic crisis was overcome, the pace of implementing subsequent reforms slowed considerably'. Phrased differently, the story of economic reforms in India is that reforms stop because our politicians (and the Deep State behind them) are not risk-takers, but comfort-zone seekers. They like the comfort zone of 'not rocking the boat', and thereby insure that Viksit Bharat 2047 might very well be no more than a dream. Before ending, I have a quibble with even this most worthy chapter. Bhattacharya's path to reform is via consensus-building (the mantra of every failed and defeated optimist). But AK fails to note that the path to consensus is littered with sabotage by the major groups (or group) hurt by the proposed reforms. Why, if everything is as well-known and as dutifully documented by all of us, are we still asking for basic reforms in agriculture, manufacturing, and governance? Note that a Supreme Court survey conducted after the withdrawal of farm-reform legislation, found an overwhelming consensus (87 per cent) among farmers wanting the proposed farm laws reform. Bhalla is chairperson of the Technical Expert Group for the first official Household Income Survey for India. Views are personal
News18
10 hours ago
- News18
Driving India's Energy Future: The Role Of Energy Sector Financial Institutions
Last Updated: India requires substantial capital investments to scale up renewable energy installations, upgrade infrastructure, and improve energy efficiency across various sectors. Written By Vivek Sen, Saarthak Khurana & Arnab Sarkar As India advances towards its ambitious climate commitments, it stands at a critical juncture, where an economy-wide energy transformation is envisioned for 2070, aimed at achieving sustainability and a low-carbon future. India's GDP is projected to soar from nearly $3 trillion (according to the International Monetary Fund) in 2023 to approximately $46 trillion by 2070, according to Goldman Sachs. To support India's sustained economic growth, energy demand is expected to rise significantly, thereby also substantially increasing per capita energy consumption, which currently stands at nearly one-third of the global average. Recognising the need to drive growth and sustainability simultaneously, India committed to ambitious targets not just for 2070 but also revised Nationally Determined Contributions (NDCs) intermediate goals for 2030. The Investment Imperative for a Net-Zero Pathway To meet these goals, India requires substantial capital investments to scale up renewable energy installations, upgrade infrastructure, and improve energy efficiency across various sectors. According to India's submission to the UNFCCC, implementing its NDC will require an estimated $2.5 trillion from 2015 to 2030, equivalent to approximately $170 billion annually, only for meeting mitigation targets. Mobilizing finance at this scale remains a significant challenge, calling for targeted institutional and policy interventions. Alongside domestic efforts, the role of multilateral development banks (MDBs) and international development finance institutions (DFIs) is increasingly recognised in de-risking investments, facilitating co-financing models, and providing concessional capital for early-stage green infrastructure projects. These institutions are well-positioned to crowd in private finance through guarantees, technical assistance, and standard-setting support. Financial institutions (FIs) with a sector-specific focus on the energy sector play a crucial role in enabling the green finance necessary for India's low-carbon transition. Traditionally catering to key areas of the economy, such as the energy sector's infrastructure needs, sector-specific FIs have broadened their mandates with the evolving economic and sustainability needs of the country. This strategic shift aligns with India's commitment to reducing greenhouse gas emissions and fostering technological innovation in the energy sector. For instance, REC has mobilised substantial green finance through multiple green bond issuances, including $450 million in July 2017 with a 10-year tenor and $750 million in April 2023 for a five-year term. In January 2024 alone, REC raised over JPY 122 billion (approximately $835 million) through four separate yen-denominated green bonds, with tenors ranging from 5 to 10 years, to support renewable energy and other eligible green infrastructure projects. Similarly, PFC has issued green bonds in USD and Euros, totalling $400 million and EUR 300 million, respectively. To best utilise the capital raised, these sector-specific FIs have strategically expanded their mandates to include renewable energy projects, EVs, green hydrogen initiatives, and other clean technologies. This evolution supports India's goals of reducing greenhouse gas emissions, enhancing energy security, and fostering technological innovation. Recent initiatives include PFC financing for 5,000 electric vehicles to reduce CO2 emissions and REC financing for green hydrogen and ammonia production facilities in Odisha. Despite significant progress in attracting green finance, current investment levels need to be increased to meet India's climate goals. According to CPI's Landscape of Green Finance in India, the country channelled about $57 billion annually into sustainability-focused investments in FY 2021-22, reflecting a substantial increase from $43 billion in FY 2020. However, this represents only about 30 per cent of the financing required to meet its Nationally Determined Contribution (NDC) targets. Barriers such as perceived risks in low-carbon projects in emerging economies and high capital costs are not just obstacles but urgent challenges that must be addressed, as highlighted in the International Energy Agency's 2023 report Reducing the Cost of Capital. Overcoming these challenges and fostering a conducive financial ecosystem is crucial to attracting global green capital from a diverse range of sources, including multilateral development banks (MDBs), sovereign wealth funds, private equity, and infrastructure finance. There are significant opportunities for energy sector FIs to transform into institutions capable of channelling international green finance and unlocking private capital on a scale. These institutions, with their deep technical expertise and established presence in infrastructure lending, are uniquely positioned to play a key role in enabling India's energy transition. By developing new financial products aligned with global standards/taxonomies and expanding their scope to include climate resilience and adaptation financing, they can serve not only as direct financiers but also as aggregators and facilitators of blended and concessional capital. In doing so, energy sector FIs can be equipped to mobilize both public and private investment across the low-carbon economy. With the proper policy support and international partnerships, they have the potential to become the next big bet in green finance and play a pivotal role in India's low-carbon growth story. Energy sector FIs can directly support India's decarbonization goals by developing innovative financial instruments that align with evolving regulatory frameworks and market conditions. These include sustainability-linked bonds, green securitization, and results-based financing, which can improve bankability and mitigate risks specific to low-carbon projects. A recent example is India's first securitization transaction backed by residential rooftop solar loan receivables, rated by ICRA. The underlying loan pool consisted of small-ticket loans, with an average size of approximately Rs 2 lakh, extended to individuals installing solar panels on their rooftops. This pioneering transaction introduced a new asset class into India's securitization market and demonstrated the potential for scaling decentralized renewable energy solutions through capital markets. In addition to bonds, energy sector FIs can explore blended finance, which combines donor-concessional finance with commercial capital to reduce investment risks in green projects. Green guarantees can provide assurance and lower perceived risks for private investors, encouraging greater private sector participation. Establishing climate resilience funds that target financing projects aimed at enhancing climate resilience can also address the need for solutions to mitigate climate impacts. Together, these instruments will not only increase the flow of capital and reduce the cost of green finance but also reinforce the strategic role of sector-specific FIs as catalysts for India's low-carbon transition. Unlocking the Potential of FIs for India's Low-Carbon Transition India's transition to a low-carbon economy necessitates a rapid and substantial increase in green investments across various sectors, including renewable energy, electric mobility, green hydrogen, energy storage, and grid modernization. Energy sector FIs are well-positioned to support this transition due to their deep market presence, experience in infrastructure financing, and alignment with national priorities. To unlock their full potential, these institutions must evolve their operational models, financial instruments, and partnership approaches. Some of the immediate steps that Energy Sector FIs can take are as follows: Aligning investment strategies with India's green finance taxonomy, while ensuring coherence with emerging international standards, will build investor confidence and attract long-term green capital. Developing co-financing models that blend concessional and commercial resources can improve the bankability of clean energy projects, while incorporating risk-sharing features such as credit enhancement can draw in private investment. Aggregating distributed assets such as rooftop solar, batteries, and electric vehicle infrastructure into larger investment portfolios will reduce transaction costs, spread risk, and enable access to institutional capital. Addressing domestic financing challenges through targeted risk-mitigation instruments such as credit guarantees, first-loss protection, and payment security mechanisms will further enhance investor confidence. top videos View all In parallel, building internal capabilities in green finance through training, knowledge sharing, and adoption of international best practices will help financial institutions evaluate project risks more effectively, integrate environmental, social, and governance considerations, and innovate through mechanisms such as results-based financing. With these interventions, energy sector FIs can play a decisive role in directing capital toward green infrastructure and technologies, helping to place India firmly on the path to a resilient and low-carbon future. (About Authors: Vivek Sen is director, Saarthak Khurana is senior manager, and Arnab Sarkar is senior analyst at Climate Policy Initiative. Views are personal) About the Author Business Desk A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover More Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! view comments Location : New Delhi, India, India First Published: August 02, 2025, 16:41 IST News business » economy Driving India's Energy Future: The Role Of Energy Sector Financial Institutions Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
