Colombo: The International Monetary Fund announced Thursday that it had reached a staff-level agreement with Sri Lanka, setting the stage for the South Asian country to obtain approximately $700 million in new financing. This development is contingent upon the final approval by the Fund’s executive board.

According to Anadolu Agency, this agreement comes after completing the fifth and sixth reviews of Sri Lanka’s $3 billion loan initiative under the reform package supported by the IMF. The forthcoming disbursement is expected to offer further assistance to Sri Lanka as it strives to stabilize its economy following a severe financial crisis.

Sri Lanka has been engaged in implementing various fiscal, monetary, and structural reforms under the IMF program, which are aimed at restoring debt sustainability, rebuilding reserves, and fostering broader economic recovery. This latest staff-level agreement signifies another step in this process, although the funds’ release is still pending the IMF executive board’s formal approval.

An IMF statement highlighted Sri Lanka’s significant exposure to the Middle East conflict, which has led to increased energy prices, disruptions to a key air hub for tourists, and impacts on Sri Lankans working in the region. The statement noted that authorities have managed to mitigate disruptions to economic activity by securing adequate fuel supplies for households and industries.

The statement further emphasized the increased downside risks to the economy due to disaster risks, ongoing trade policy uncertainty, and the conflict in the Middle East. It stressed the importance of accelerating the reform momentum to ensure macroeconomic stability, boost Sri Lanka’s resilience to shocks, and keep the economy on track toward recovery and inclusive growth.