The International Monetary Fund has reached a new agreement with Sri Lanka, unlocking approximately $344 million in funding aimed at sustaining the island nation's ongoing economic recovery and reform efforts. This development follows the successful fourth review of Sri Lanka’s extended loan program, part of a broader $3 billion bailout package agreed upon in 2023.

Sri Lanka, which defaulted on its $46 billion foreign debt in April 2022 after depleting its foreign reserves, has been undergoing sweeping reforms to stabilize its economy. The bailout program, initially negotiated by the previous administration, required deep structural changes—including slashing subsidies and raising taxes. The current leftist government led by President Anura Kumara Dissanayake has continued with the reforms, despite their domestic unpopularity.

IMF mission chief Evan Papageorgiou praised the nation’s progress, highlighting a projected 5% economic growth rebound in 2024 as a “remarkable” turnaround from crisis. He noted that Sri Lanka’s fiscal improvements had been substantial, with stronger revenue collection, bolstered foreign reserves now at $6.5 billion, and debt restructuring efforts nearing completion.

Once formally approved by the IMF’s executive board, the disbursement of this latest tranche will bring Sri Lanka’s total funding under the program to about $1.7 billion, providing a critical boost to the country's financial stability and reform trajectory.

Source: News Agencies