The International Monetary Fund (IMF) approved the third review of Sri Lanka’s $2.9 billion bailout on Friday, releasing an additional $334 million to support the country’s economic recovery.
This brings total disbursements under the program to approximately $1.3 billion.
The approval follows Sri Lanka’s commitment to IMF-mandated fiscal targets under President Anura Kumara Dissanayake’s first full-year budget. The budget includes a primary surplus target of 2.3% of GDP for 2025, aligning with the conditions of the IMF program.
Additionally, Sri Lanka finalized a $25 billion debt restructuring with bondholders and key bilateral creditors last year, a key requirement for continued IMF support.
“Program performance has been strong, with all quantitative targets met except for the indicative target on social spending,” said Kenji Okamura, IMF Deputy Managing Director. He added that most structural benchmarks due by January 2025 were either met or implemented with slight delays.
Sri Lanka secured the IMF bailout in March 2023 to stabilize its economy following a severe financial crisis in 2022, which sent inflation soaring to 70%, the currency to record lows, and GDP contracting by 7.3%. The economy shrank by 2.3% in 2023 but is projected to grow by 5% this year, according to Dissanayake’s budget speech.
Inflation has now eased, and the Sri Lankan rupee’s depreciation slowed to 1.3% against the U.S. dollar.
