IMF Sanctions Third Review of Sri Lanka's Bailout Amidst Economic Vulnerability

The International Monetary Fund (IMF) approved the third review of Sri Lanka's $2.9 billion bailout, releasing another $333 million. While economic recovery signs surface, the nation must finalize debt restructuring to continue progress. Tax reforms and economic policies are pivotal for reaching fiscal goals as growth gradually resumes.

The International Monetary Fund (IMF) has successfully approved the third review of Sri Lanka's $2.9 billion bailout package, while expressing concerns about the nation's economic fragility. The latest assessment by the IMF results in the disbursement of an additional $333 million, part of a cumulative $1.3 billion allocated to Sri Lanka thus far.

This approval comes even as the Sri Lankan economy shows early recovery indicators. However, significant challenges remain: the country still must complete a $12.5 billion debt restructuring with bondholders and a $10 billion renegotiation with major bilateral lenders, including Japan, China, and India, to advance the program.

IMF Senior Mission Chief Peter Breuer emphasized the importance of tax revenue adherence and reforms in state-owned enterprises to meet the target of a 2.3% primary surplus of GDP in the coming year. An interim budget is anticipated in December, as the new Sri Lankan President aims to finish the debt restructuring by year-end.

(With inputs from agencies.)