IMF Approves Second Review of Sri Lanka’s Bailout Amidst Economic Challenges

The International Monetary Fund (IMF) has given the green light for the second review of Sri Lanka’s $2.9 billion bailout, unlocking approximately $336 million in additional funding to support the crisis-hit nation. While acknowledging signs of economic recovery such as a 7% appreciation of the rupee and a slowdown in inflation to 0.9% in May, the IMF cautioned that Sri Lanka’s economy remains fragile. The path to debt sustainability, according to the IMF, is precarious, emphasizing the urgent need for Colombo to finalize agreements with key creditors like Japan, India, and the China Development Bank.

Sri Lanka’s finance minister, Shehan Semasinghe, expressed optimism about reaching in-principle agreements with bondholders and bilateral creditors soon, highlighting ongoing efforts to secure economic stability amidst ongoing debt restructuring talks and revenue mobilization challenges. However, the IMF underscored the importance of maintaining fiscal discipline and implementing robust reforms to ensure long-term economic resilience and stability in Sri Lanka.