IMF releases $250m of Sri Lanka loan

COLOMBO, June 2 (AFP): The International Monetary Fund (IMF) announced the release of the latest instalment of Sri Lanka's $1.5 billion bailout on Saturday, but warned that restructuring the loss-making national airline was essential to sustain economic recovery.

The IMF welcomed the island nation's increase in fuel prices last month -a precondition for it to receive $252 million of the three-year loan approved in June 2016.

Sri Lanka's economy has been on the mend since the IMF bailout, but growth in 2017 was more sluggish than expected and at 3.1 per cent was the slowest in 16 years.

The release of the latest tranche of the loan had been held up pending the government agreeing to raise fuel prices to recover production costs and do away with subsidies.

The IMF said the price hike by state-run Ceylon Petroleum Corporation, in some cases by as much as 130 per cent, was a "major achievement" that would reduce fiscal risk.