IMF approves nearly $3-bn bailout for Sri Lanka to stabilise its economy

The International Monetary Fund said on Monday its executive board has approved a nearly $3-billion bailout for Sri Lanka, potentially helping the near-bankrupt country emerge from its worst financial crisis in over seven decades.

Sri Lankan President Ranil Wickremesinghe's office said the decision will enable the country to access up to $7 billion in funding overall.

The IMF program will help improve Sri Lanka's standing in international capital markets, the president's office said.

IMF's executive board on Monday approved a $3-billion four-year extended financing arrangement for Sri Lanka, paving the way for immediate disbursement of about $333 million to the cash-strapped country.

The IMF said the new Extended Fund Facility (EFF) arrangement program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential.

It said the board's approval would catalyze financial support from other development partners.

The bailout will inject much-needed funding for a nation grappling with soaring prices, supply shortages and eroded foreign currency reserves after defaulting on its overseas debt last year.

With inputs from Reuters