(Bloomberg) -- Sri Lanka’s economy grew 5.5% last quarter, boosting sentiment as the nation looks to finalize debt restructuring that’s crucial to keep the International Monetary Fund’s aid flowing.
The expansion compares with a 4.7% growth in the April-June period and comes as authorities said that bondholders backed the dollar bond swap plan.
Last month, Sri Lanka secured access to $333 million in financing out of a $3 billion IMF bailout program. While the funds will help stabilize the island nation’s economy, they are contingent on further policy actions, including progress in debt restructuring.
President Anura Kumara Dissanayake said on Nov. 21 that his newly-elected administration will continue with the IMF loan program and that ensuring stability was paramount for his government, with the economy too fragile to take big shocks.
Authorities expect to conclude the restructuring of $12.6 billion in debt this month, a move that will be a key milestone in Sri Lanka’s efforts to overhaul its economy after the country defaulted in 2022, as it helps restoring access to international markets.
The central bank expects Sri Lanka’s economy to grow between 4.5% and 5% this year and by “well above” 3% in 2025. Governor Nandalal Weerasinghe has also said the monetary authority has strengthened foreign exchange reserves, which would be a buffer to meet debt servicing requirements.
--With assistance from Shinjini Datta and Asantha Sirimanne.
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