The International Monetary Fund (IMF) has given the green light to the third review of Sri Lanka’s $2.9bn bailout package, although it cautioned about the ongoing vulnerability of the country’s economy.
On Saturday, the IMF announced its decision to disburse approximately $333m, bringing the total funding amount to $1.3bn for Sri Lanka amidst signs of economic recovery.
To progress further in the program, Sri Lanka must finalize a $12.5bn bondholder debt restructuring and a $10bn debt renegotiation with key bilateral creditors such as Japan, China, and India as outlined by the IMF.
The financial assistance from the IMF obtained in March last year played a crucial role in stabilizing economic conditions following Sri Lanka’s severe financial crisis in 2022.
Reporting from Colombo, Al Jazeera correspondent Minelle Fernandez highlighted that despite facing dire circumstances in 2022 with shortages of essential supplies like fuel and food due to lack of funds, there has been noticeable improvement since then.
Sri Lanka sought aid from the IMF after defaulting on its external debt totaling $46bn in April 2022 which triggered widespread protests and led to President Gotabaya Rajapaksa stepping down due to public pressure.
Fernandez emphasized that this cash injection will help maintain stability by ensuring a steady supply of basic necessities for Sri Lanka’s population.
Adhering to tax revenue targets and continuing reforms within state-owned enterprises are vital for achieving a primary surplus goal equivalent to 2.3 percent of GDP next year according to Peter Breuer, senior mission chief at IMF who recently concluded a visit to Colombo.
Link from www.aljazeera.com