IMF starts review of its USD 2.9 billion bailout to Sri Lanka

Colombo: The IMF on Thursday started conducting the first review of its USD 2.9 billion bailout package for crisis-hit Sri Lanka during which it will have to convince the global lender that it has fulfilled conditions set by it under the programme to revive the island nation's economy.

Sri Lanka was hit by its worst economic crisis in history when the country's foreign exchange reserves fell to a critical low and the public came out on the streets to protest the shortage of fuel, fertilisers and essential commodities.

The International Monetary Fund (IMF) review team, which arrived here on Wednesday, would remain in the country till September 27, officials said.

The first review of the IMF's bailout package has got underway, State Minister of Finance Shehan Semasinghe said.

“We are collaborating closely with the IMF team throughout this process to overcome the challenges ahead of us," Semasinghe posted on platform X.

In March, the IMF extended its first tranche of the USD 2.9 billion bailout.

Semasinghe said the second tranche should be made available at the end of the review.

Sri Lanka approached the IMF for its 16th facility, having declared bankruptcy in April 2022.

The island nation announced its first-ever sovereign default since gaining independence from Britain in 1948.

After months of negotiations, the government and the international lender reached an agreement which culminated in the bailout approval last March.

The facility was approved subject to stringent reforms which the government say they have implemented.

The forex crisis which forced the default of USD 85 billion left the country short of funds to finance its imports.

Support worth USD 4 billion from India paid for imports of fuel and essentials as large street protests held over several months turned into a political crisis.

Former president Gotabaya Rajapaksa resigned and fled the country in mid-July as tens of thousands stormed his office and residence in angry protests over his inability to tackle the worst economic crisis.