Sri Lanka, IMF reach agreement for disbursal of 2nd tranche of bailout

COLOMBO, Oct 21 (PTI): Sri Lanka and the IMF have reached a crucial staff-level agreement to release the second tranche of about USD 330 million out of the USD 2.9 billion bailout package which will help in the cash-strapped country's economic recovery.

The International Monetary Fund in March this year approved a 48-month, USD 2.9 billion extended arrangement under the Extended Fund Facility (EFF) to support Sri Lanka's economic policies and reforms.

The IMF mission that visited Sri Lanka for the first review of the global lender-supported Extended Fund Facility programme for the country noted that despite early signs of stabilisation, full economic recovery is not yet assured.

"Sri Lanka will have access to SDR 254 million (about US$330 million) in financing once the review is approved by IMF Management and IMF Executive Board," the IMF said in a release on Thursday.

The release of the second tranche at the conclusion of the first review of the facility approved in March is subject to approval by the IMF executive board in the period ahead, it said.

The IMF however said despite showing early signs of stabilisation the full economic recovery is not yet assured.

It stressed, Sri Lanka's external position has weakened as a result of prolonged debt restructuring discussions and reserve accumulation has slowed in recent months.