IMF approves $344 million payout to Sri Lanka as economic reforms show progress

The International Monetary Fund (IMF) has reached a staff-level agreement with Sri Lanka, unlocking approximately $344 million in financial assistance as part of the country’s ongoing economic recovery efforts.

This marks the fourth successful review under Sri Lanka's $3 billion bailout program and will bring the total IMF disbursement to around $1.7 billion.

Sri Lanka’s economic crisis peaked in April 2022 when the island nation defaulted on $46 billion in foreign debt after exhausting its foreign currency reserves. The crisis left the country unable to import essential goods such as food, fuel, and medicine, sparking widespread shortages and public unrest.

To address the crisis, the previous government secured a four-year bailout from the IMF, committing to a tough economic reform program that included subsidy cuts and tax hikes. These measures have been continued by the current administration led by President Anura Kumara Dissanayake, despite their unpopularity.

According to IMF mission chief Evan Papageorgiou, the reform agenda has begun to yield positive results. “Sri Lanka’s ambitious reform agenda continues to deliver commendable outcomes,” he stated after recent discussions in Washington. He noted that the economy is projected to grow by 5% in 2024 — a significant rebound from the depths of the crisis.

Papageorgiou also highlighted key achievements including improved government revenues, official reserves reaching $6.5 billion, and substantial progress in the country’s debt restructuring process, which is now nearing completion.

The new $344 million installment is pending approval by the IMF’s executive board. Once finalised, it will serve as vital support for Sri Lanka as the country works to stabilise its economy and regain financial sustainability.