Sri Lanka's Economic Recovery: IMF's Third Review Sparks Hope Amid Challenges

The IMF approved the third review of Sri Lanka's $2.9 billion bailout, releasing $333 million. The country faces debt restructuring with bondholders and bilateral creditors, crucial for future economic stability. Achieving a GDP surplus target requires fiscal reforms, with a new budget expected in December.

The International Monetary Fund (IMF) has approved the third review of Sri Lanka's $2.9 billion bailout, offering a glimmer of hope for the country's beleaguered economy. This latest approval signals the release of approximately $333 million, bringing the total funds received by Sri Lanka to around $1.3 billion.

Amid this development, Sri Lanka still faces formidable challenges, including the restructuring of $12.5 billion in bondholder debt and renegotiating $10 billion with bilateral creditors, such as Japan, China, and India. This comes after the IMF bailout, secured last March, helped stabilize an economy that was in freefall, facing its worst crisis in over 70 years in 2022.

IMF Senior Mission Chief Peter Breuer emphasized the importance of sticking to fiscal reforms and meeting tax revenue requirements to achieve a primary surplus target of 2.3% of GDP. An interim budget will be presented in December, with hopes of completing debt restructuring by the year's end. The island nation is expected to grow its economy by 4.4% this year, marking its first increase in three years as indicators suggest a slow recovery.

(With inputs from agencies.)