The bailout comes as the island nation grapples with its worst economic crisis in 70 years.
Sri Lanka has received the first tranche of its bailout package from the International Monetary Fund (IMF), President Ranil Wickremesinghe has told parliament.
“It sets the stage for Sri Lanka to have better fiscal discipline and better governance,” Wickremesinghe said on Wednesday.
The first tranche of $330 million comes after the IMF on Monday approved a $3 billion rescue package for the island nation in crisis.
THE IMF bailout is expected to catalyze an additional $3.75 billion in support from the World Bank, Asian Development Bank and other lenders. This paves the way for Sri Lanka to rework a substantial portion of its $84 billion public debt.
State Finance Minister Shehan Semasinghe said in an interview that Sri Lanka is ready to engage in restructuring talks with bilateral and private creditors to restore debt sustainability as soon as possible.
It was the IMF’s 17th rescue package for Sri Lanka and the third since the end of the decades-long civil war in 2009.
Economic mismanagement and the fallout from the COVID-19 pandemic left Sri Lanka with a shortage of dollars for essential imports early last year, plunging the country into its worst financial crisis since independence.
The crisis has seen Sri Lankans grappling with soaring costs of living, high income taxes of up to 36% and a 66% increase in electricity tariffs.
Al Jazeera’s Minelle Fernandez, reporting from Colombo, said on Tuesday that the president intended to use the first tranche of IMF money in areas most affected by the crisis, including health care and tourism. .
China, Sri Lanka’s biggest bilateral creditor, agreed earlier this month to restructure its loans to the country, removing the final hurdle to receiving the bailout.