COLOMBO: The International Monetary Fund will evaluateSri 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 Tuesday.
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, saidSri Lankawill 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 toSri Lanka.
Mathai said disbursement of the rest of the loan must await review ofColombo's progress in tackling the island's balance of payments problem.
"We need more time to evaluate the (policy) changes," he told reporters inColombo. "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 byColombowere a "step in the right direction."
Sri Lankahas 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 afterSri Lankahad 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 ofSri 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.
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