IMF Approves Third Review of Sri Lanka's $2.9bn Bailout

Colombo: The International Monetary Fund (IMF) has approved the third review of Sri Lanka's $2.9 billion bailout package, approving another tranche of funding worth approximately $333 million to help the crisis-hit nation recover.

The global lender on Saturday warned that Sri Lanka's economy still remains vulnerable due to its debt restructuring and a complex process involving bilateral creditors, including Japan, China, and India.

To take the programme forward, Sri Lanka needs to complete a $12.5 billion bondholder debt restructuring and a $10 billion debt rework with bilateral creditors. However, signs of an economic recovery are emerging as the country stabilises from its worst financial crisis in over seven decades that started in 2022.

Speaking to Al Jazeera from Colombo, Minelle Fernandez reported that the IMF is pleased with the pace the government has been keeping and believes the economy "has stabilised from those dark days" of no money for fuel, food, medicine, or energy.

The $46 billion external debt default led by the shortage of foreign exchange pushed Sri Lanka to seek a bailout package. Mass street protests forced then-President Gotabaya Rajapaksa to resign as the country struggled to finance essential imports.

According to Peter Breuer, IMF senior mission chief in Colombo, staying on track with tax revenue requirements and continuing reforms of state-owned enterprises will be crucial to hitting Sri Lanka's primary surplus target of 2.3 percent of gross domestic product (GDP) next year.

Sri Lanka is now expected to emerge from recession, with the World Bank predicting an economic growth rate of 4.4 percent this year - its first increase in three years - following months of turmoil and mass protests that forced former President Rajapaksa to step down after months of crippling power cuts and economic chaos.