COLOMBO, April 4 (BSS/AFP) - The International Monetary Fund will evaluate Sri Lanka's progress on measures to stabilise its economy before releasing the final tranche of a $2.6-billion bailout, a top IMF official said yesterday.
The statement came a day after the Washington-based lender said it would resume releasing money from the bailout package following moves by the island nation to avert a balance of payments crisis.
The IMF's country representative, Koshi Mathai, said Sri Lanka will get a long-delayed $427 million installment from the bailout, agreed in 2009, "in the next few days."
The sum is part of an $800-million final installment due to
Mathai said disbursement of the rest of the loan must await
review of Colombo's progress in tackling the island's balance of
"We need more time to evaluate the (policy) changes," he
told reporters in Colombo. "We have seen a very different policy
regime (this year), so let's evaluate how it operates and what
kind of effect it has on the economy."
But he said the policies adopted by Colombo were a "step in
the right direction."
Sri Lanka has sought to overcome its balance of payments
troubles, triggered by a surge in domestic demand following the
end of the country's decades-long ethnic civil war in 2009, with
several new measures.
It has hiked interest rates, allowed its currency to fall
and imposed new taxes to curb imports.
The bailout was announced in 2009 just after Sri Lanka had
crushed Tamil separatist rebels and the island's foreign reserves
had dropped to a dangerously low level of $1 billion.
Mathai said the fresh IMF review of Sri Lanka's economy
could be carried out by mid-year.
The country needs to borrow heavily to finance the trade
deficit and repay debt which could push the country into a
vicious debt cycle, experts warn. The government has insisted,
however, that it does not risk a sovereign default.