IMF Approves $344 Million Loan to Support Sri Lanka's Economic Reforms

The International Monetary Fund (IMF) has reached a staff-level agreement with Sri Lanka on the fourth review of its $3 billion bailout program, paving the way for the release of approximately $344 million in financial assistance, pending executive board approval. This agreement comes as Sri Lanka continues its recovery from a severe economic crisis that began with a $46 billion foreign debt default in 2022, which led to acute shortages of essentials. The IMF praised the country's ambitious reform agenda, including subsidy cuts, tax hikes, and improvements in revenue collection that have raised the revenue-to-GDP ratio and increased official reserves to $6.5 billion. Despite the progress, the IMF highlighted ongoing risks, particularly due to global trade uncertainties and recent U.S. tariffs affecting Sri Lankan exports. The country is projected to achieve a 5% economic growth rebound in 2024, and its debt restructuring process is nearing completion. The new funds, once approved, will bring total IMF disbursements to Sri Lanka under the current program to about $1.7 billion.