The IMF has agreed to release the fourth tranche of $334 million from its $2.9 billion bailout package to Sri Lanka to strengthen the island nation's recovery from its 2022 bankruptcy. The release of the fourth tranche was approved on Friday after the Executive Board of the International Monetary Fund completed the third review under the 48-month Extended Fund Facility Arrangement to Sri Lanka.
The global lender said it would release about $334 million to the crisis-hit nation, bringing total funding to around $1.3 billion. The IMF said Sri Lanka has performed strongly under the programme.
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"All quantitative targets for end-December 2024 were met, except the indicative target on social spending. Most structural benchmarks due by end-January 2025 were either met or implemented with delay. The recent successful completion of the bond exchange is a major milestone towards restoring debt sustainability," the IMF said in a statement.
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"Reform efforts are bearing fruit with the recovery gaining momentum. As the economy is still vulnerable, sustaining the reform agenda is critical to put the economy on a path towards lasting recovery and debt sustainability," the statement said.
Sri Lanka secured its seventeenth IMF programme in 2023 when the island was plunged into its first-ever sovereign default in the unprecedented economic crisis caused by forex shortages.
This triggered street protests due to acute shortages of essentials, food and fuel.
Between March 2022 and March 2023, the Indian credit line of nearly $4 billion came to the island's rescue.
The Indian assistance ended fuel queues and essentials shortages.
As the country erupted in a crisis, calls were made for the ouster of then-president Gotabaya Rajapaksa.
President Anura Kumara Dissanayake's predecessor Ranil Wickremesinghe, who implemented the IMF reforms, became unpopular and lost the September presidential election.
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