IMF approves third review of Sri Lanka’s $2.9bn bailout, but warns of risks

Global lender says it will release about $333m to crisis-hit nation as signs of economic recovery emerge.

IMF to release $333 million to Sri Lanka: Global lender reports signs of an economic recovery

The International Monetary Fund (IMF) has approved the third review of Sri Lanka’s $2.9bn bailout but warned that the South Asian island nation’s economy remains vulnerable.

The global lender said on Saturday that it would release about $333m, bringing total funding to $1.3bn, to the crisis-hit nation. Signs of an economic recovery were emerging, it said.

Sri Lanka still needs to complete a $12.5bn bondholder debt restructuring and a $10bn debt rework with bilateral creditors including Japan, China and India to take the programme forward, the IMF said.

The IMF bailout secured in March last year helped stabilise economic conditions after the cash-strapped country plunged into its worst financial crisis in more than seven decades in 2022.

Reporting from the capital, Colombo, Al Jazeera’s Minelle Fernandez said the IMF seemed happy with the pace the government has been keeping and the economy “has stabilised from those dark days of 2022 with no money for fuel, food, medicine, energy”.

Sri Lanka went to the IMF for a rescue package after defaulting on its $46bn external debt in April 2022.

The shortage of foreign exchange, which left the country unable to finance even the most essential imports of food and fuel, led to months of mass street protests and forced then-President Gotabaya Rajapaksa to resign.

“Keeping things stable in order to shore up reserves, in order to make sure there’s a stable supply of basic necessities, all of those things will be facilitated by this cash infusion that the Sri Lankan government gets,”