Sri Lanka's central bank reduced key policy rates by 100 basis points on Thursday, as expected, doubling down on efforts to spur growth and finalise the first review of a $2.9 billion bailout package from the International Monetary Fund.

The Central Bank of Sri Lanka (CBSL) lowered the standing deposit facility rate and the standing lending facility rate to 10% and 11%, respectively, it said in a statement, to put the crisis-hit economy on a firmer growth footing.

CBSL had already reduced rates by 450 bps in two moves over June and July after raising them by a record 1,050 bps from March 2022 to counter the island's worst financial crisis in over seven decades.

The rate cut was in line with market expectations and comes after the IMF failed to reach an agreement with the island nation in its first review of its bailout package last month, due to a potential shortfall in government revenue.

That could delay the release of the second tranche of funds under the bailout. (Reporting by Uditha Jayasinghe and Swati Bhat; Editing by Sam Holmes and Sudipto Ganguly)