IMF Approves Sri Lanka Review Amid Economic Recovery Signs

The IMF approved Sri Lanka's bailout review, releasing $333 million, but emphasized the need for debt restructuring with bondholders and bilateral creditors. The bailout stabilized the crisis-hit economy, but reforms are crucial for meeting GDP targets. The island's economy is expected to grow by 4.4% this year.

The International Monetary Fund (IMF) has given the green light for the third review of Sri Lanka's $2.9 billion bailout, yet expressed caution over the nation's economy. The IMF stated on Saturday that it would release $333 million, upping the total funding disbursed to approximately $1.3 billion.

Despite signs of economic recovery, Sri Lanka is required to tackle a $12.5 billion bondholder debt restructuring and a $10 billion bilateral debt rework involving creditors like Japan, China, and India. The IMF bailout, finalized last March, was pivotal in stabilizing Sri Lanka's financial situation after a severe crisis last year.

According to Peter Breuer, IMF Senior Mission Chief, it is essential for Sri Lanka to abide by tax revenue requirements and state-owned enterprise reforms to reach a 2.3% GDP surplus next year. An interim budget is slated for a December parliamentary presentation, aiming to conclude debt restructuring by year-end.

(With inputs from agencies.)