AFP –The International Monetary Fund’s (IMF) board approved two reviews of Sri Lanka’s loan programme, making USD695 million in additional loans immediately available to the island nation.
It is the latest tranche in the country’s four-year USD3 billion bailout, with the Fund warning of further risks due to the economic impact of the Middle East conflict.
Surging oil prices due to the conflict have heavily impacted many import-dependent Asian countries.
“Sri Lanka’s strong implementation under the EFF arrangement has continued despite challenging circumstances,” said the IMF’s Deputy Managing Director and Acting Chair Kenji Okamura.
“Gains from the economic reform programme helped preserve economic resilience and provided room to respond to cyclone Ditwah and the Middle East conflict. The latter, however, has significantly worsened Sri Lanka’s economic outlook and tilted risks to the downside.”
The IMF projects 2026 growth to slow to three per cent, with higher oil prices increasing inflation and weighing on the current account balance.
The board’s approval was contingent on Sri Lanka adjusting certain energy market subsidies issued in the wake of the conflict.
The statement said the Sri Lankan authorities had met the Fund’s requirements on fuel and electricity prices meeting cost-recovery criteria.
Criteria on ensuring no new external debts and on not imposing or intensifying import restrictions “were not observed”, however.
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