Sri Lanka Stabilizing After Bailout

Sri Lanka’s economy has begun to stabilize after securing a $1.5 billion bailout earlier this year, but the island needs to build its dwindling foreign reserves, the IMF said Saturday. The Washington-based International Monetary Fund said it had just concluded its first review of Sri Lanka’s economy after announcing the bailout in June and labeled its performance “broadly satisfactory”, World Bulletin reported. “Sri Lanka’s performance under the fund-supported program has been broadly satisfactory despite challenging circumstances,” IMF’s Acting Chair and Deputy Managing Director, Tao Zhang, said in a statement. He said the IMF on Friday released $162.6 million to Sri Lanka as the second tranche of its bailout that will be disbursed over three years. Sri Lanka’s macroeconomic and financial conditions had begun to stabilize, inflation has trended down, and the balance of payments had improved, he said. However, he cautioned Sri Lanka’s international reserves remained below comfortable levels and also warned of credit expansion that could fuel further inflation. Official figures show the current reserves of Sri Lanka at $6.06 billion, sufficient to finance imports for nearly four months.