Sri Lanka's Parliament approves new anti-corruption law as part of an IMF economic bailout plan

COLOMBO, Sri Lanka (AP) — Sri Lanka’s Parliament on Wednesday approved an anti-corruption legislation as the island nation attempts to overcome an unprecedented economic crisis.

The legislation is part of the prerequisites of an International Monterey Fund bailout package approved in March, under which nearly $3 billion in government budgetary support will be disbursed in stages to the bankrupt nation. The bailout is due for its first review in September.

The bill was passed without opposition in the 225-member parliament.

The IMF — which described Sri Lanka’s debt as unsustainable — has stressed that anti-corruption and governance reforms are imperative in order to enable the Sri Lankans to benefit from the current economic reforms.

The development lender had said previously it was conducting — for the first time in an Asian country — an “in-depth governance diagnostic exercise” to assess corruption and vulnerabilities and "provide prioritized and sequenced recommendations.”

The IMF Governance Diagnostic Report is set to be published in September.

The new legislation aims at preventing and eradicating bribery and corruption, and enhancing transparency while increasing accountability and enhancing public confidence in Sri Lankan administration, according to the bill.

Sri Lanka has been grappling with an unprecedented economic crisis since 2022, after suspending repayment of foreign loans because of a severe foreign currency crisis triggered by the COVID-19 pandemic, excessive borrowing by the government, and efforts by the central bank to stabilize the Sri Lankan rupee with scarce foreign reserves.

Sri Lanka’s total debt has exceeded $83 billion, of which $41.5 billion is foreign and $42.1 billion is domestic.

In a bid to overcome the crisis, Sri Lanka has taken initiatives to restructure its both domestic and foreign debts.

Sri Lanka's economic crisis caused severe shortages of food, medicine, fuel, cooking gas and electricity last year which led to massive street protests that forced then-President Gotabaya Rajapaksa to flee the country and resign.

The economy has shown signs of improvement since current president Ranil Wickremesinghe took over as president last July. Shortages have been alleviated, power cuts have ended and the rupee has begun to strengthen.