cashstrapped sri lanka cut interest rates on thursday a week after announcing a major debt restructuring in line with an imf bailout following an unprecedented economic crisis last year the central bank of sri lanka slashed the benchmark lending rate by two percentage points to 12 percent after unveiling the overhaul that involved a 30 percent haircut for foreign bond holders the move also followed a sharp decline in inflation to 12 percent in june down from 252 percent in may and a record high of 698 percent in september that was fuelled by soaring food prices it forecast inflation to fall to single figures by the end of the year the bank said it made the cut the second since july 2020 following a careful analysis of the current and expected developments including the fasterthanenvisaged disinflation process and benign inflation expectations the bankrupt nation secured a fouryear 29 billion international monetary fund bailout in march and received the first installment of 330 million in march last year sri lanka ran out of cash to pay for even the most essential imports leading to shortages of food fuel and medicines as the economic crisis worsened the central bank began raising rates from early 2022 with a record sevenpercentagepoint hike in april last year a week before the government defaulted on its 46 billion foreign debt thenpresident gotabaya rajapaksa who faced allegations of mismanagement was forced to flee the country and resign in july 2022 after months of protests