Sri Lanka is to receive the six tranche of its International Monetary Fund (IMF) loan, worth US $ 246.7 million provided it meets IMF conditions, including allowing for exchange rate flexibility without using up foreign reserves.
The IMF's deputy division chief for Asia-Pacific, Manuela Goretti acknowledged efforts by Sri Lanka “to bring their economic reform program back on track following the political turmoil of late 2018”.
“The economy is gradually stabilising after the weak economic performance in 2018, in the context of external shocks and domestic political uncertainty,” Goretti said.
The IMF is also pushing for more prudent spending by Colombo and reforms of the country's several state owned enterprises.
The IMF programme is crucial for Sri Lanka to continue ensure favourable borrowing terms. However the fund delayed discussions on the sixth tranche of a three-year loan in November following the country’s plunge into a political crisis over the Sri Lankan president’s attempt to replace the prime minister.
Earlier this week Sri Lanka had asked the IMF to extend a $1.5 billion loan by another year.
The granting of the tranche was postponed last year following weeks of political crisis after the president sacked the prime minister and dissolved parliament.
The IMD disbursed US $1 billion of the $ 1.5 billion three year EFF loan that was agreed in 2016.
In the wake of Sri Lanka’s political turmoil, several major international agencies downgraded the government’s credit rating, in what was seen as a blow to the island’s economy.