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Colombo, Sri Lanka: The International Monetary Fund approved a further $700 million in loans for Sri Lanka on Thursday, while urging Colombo to accelerate reforms to guard its post-2022 economic recovery and address shocks from the Middle East crisis.
The Fund mission approved the latest tranche of its four-year $2.9 billion bailout provided officials restore cost recovery in energy pricing, among other conditions.
The government has said it will spend nearly $200 million on fuel subsidies after an energy crunch caused by the Iran war forced it to raise retail prices by a third, in line with global trends.
The IMF is opposed to general energy subsidies, and wants Colombo to ensure cost recovery in electricity prices, which are subsidised for smaller consumers.
"Sri Lanka is significantly exposed to the Middle East conflict, which has heightened energy prices, disrupted a key air hub for tourists, and affected Sri Lankans working in the region," the IMF said in a statement.
It emphasised the "urgency of accelerating reform momentum to safeguard macroeconomic stability".
