Sri Lanka to receive first tranche from IMF in next two days

A general view of a main market is seen, after The International Monetary Fund's executive board approved a $3 billion, in Colombo, Sri Lanka March 21, 2023. REUTERS/Dinuka Liyanawatte

COLOMBO (Reuters) - Sri Lanka will receive the first tranche of about $330 million from the International Monetary Fund in the next two days, and, going forward, disbursements would be tied to reviews that take place every six months, an IMF official said on Tuesday.

The IMF on Monday said its executive board approved a nearly $3 billion bailout for Sri Lanka, and the country's presidency said the program will enable it to access up to $7 billion in overall funding.

Economic mismanagement coupled with the impact of the COVID-19 pandemic left Sri Lanka severely short of dollars for essential imports at the start of last year, tipping the country into its worst financial crisis in seven decades.

Peter Breuer, Senior Mission Chief for Sri Lanka, Asia and Pacific Department at IMF, said debt sustainability is one of the key criteria for the IMF to approve a bailout for any economy, and though debt in Sri Lanka is not yet sustainable, it is expected to be on a forward-looking basis.

International dollar bonds issued by the country soared following the IMF package approval. Bonds were up by 0.69 cents to 1.50 cents across tenors, with the March 2029 bond leading the gains.

(Additional reporting by Sudipto Ganguly and Shilpa Jamkhandikar; Editing by Muralikumar Anantharaman and Christian Schmollinger)

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