IMF bailout not a silver bullet for Sri Lanka, warns Moody's Analytics

“The exuberance that has been reflected in the financial markets will really fade unless we see some significant improvements from the government as also in Sri Lanka's growth prospects,” said Moody's Analytics.

Sri Lanka has a difficult road ahead irrespective of how much funding it receives from multilateral and global financial agencies, a senior economist at Moody's Analytics told Reuters on Tuesday.

Laborers load sacks of imported potatoes to hand carts at a market place in Colombo, Sri Lanka. The International Monetary Fund said Monday that its executive board has approved a nearly $3 billion bailout program for Sri Lanka over four years to help salvage the country's bankrupt economy. (AP)

Moody’s Analytics is independent of Moody's Investors Service, the rating agency.

The International Monetary Fund (IMF) approved a nearly $3 billion bailout for Sri Lanka on Monday and the country's presidency said the programme will enable it to access up to $7 billion in overall funding.

"It (the IMF support) is definitely not like the silver bullet they think," said Katrina Ell, senior economist at Moody's Analytics.

"The exuberance that has been reflected in the financial markets will really fade unless we see some significant improvements from the government as also in Sri Lanka's growth prospects".

"We need to keep in mind that it's still going to be a difficult road no matter how much potential funds or support is being thrown at Sri Lanka," Ell said.