Sri Lanka’s newly elected President, Anura Kumara Dissanayake, has endorsed a contentious $2.9 billion International Monetary Fund (IMF) bailout, reversing his earlier campaign promise to renegotiate the agreement. 

In his first parliamentary address on Thursday, Dissanayake, who recently solidified his control with a sweeping legislative majority, emphasized that Sri Lanka’s economy remains too fragile for significant deviations from the IMF program.

“The economy is in such a state that it cannot take the slightest shock… there is no room to make mistakes,” Dissanayake said. “This is not the time to discuss if the terms are good or bad if the agreement is favorable to us or not. The process took about two years, and we cannot start again.”

The IMF loan, secured early last year under former President Ranil Wickremesinghe, requires Sri Lanka to implement tough reforms, including sharp tax hikes, removal of energy subsidies, and restructuring of more than 50 loss-making state-owned enterprises. Dissanayake’s National People’s Power party had criticized these measures during his campaign and pledged to renegotiate the terms.

However, Dissanayake told parliament that he would adhere to the deal to avoid derailing the nation’s economic recovery. The IMF’s third review of the four-year loan program is expected to conclude this weekend, following ongoing discussions between Sri Lanka’s finance ministry and an IMF delegation in Colombo. The approval could unlock a $330 million tranche for the country’s financial stability.

Last month, Dissanayake’s interim cabinet approved a contentious restructuring plan for $14.7 billion in foreign commercial debt, a central requirement of the IMF program. The agreement, tentatively initiated by Wickremesinghe, aims to rebuild the economy after its worst contraction in history, which saw it shrink by 7.8% in 2022.