Sri Lanka’s statistics office said Friday that inflation had slowed to 0.9 per cent in March, the lowest year-on-year price increase since an unprecedented economic crisis.

The island nation defaulted on its $46 billion foreign debt in April 2022 after a foreign exchange wipeout left it unable to import food, fuel and other essentials.

This month’s inflation reading, from the benchmark Colombo Consumer Price Index, is a huge drop from the peak of nearly 70 percent in September of that year.

The central bank this week cut its benchmark lending rate from 10 percent to 9.5 per cent -- the first reduction in four months -- in a measure it said would boost “the ongoing revival of economic activity”.

Months of protests during the economic crisis led to the ouster of then-president Gotabaya Rajapaksa when demonstrators stormed his residence.

His successor Ranil Wickremesinghe has sharply raised taxes, cut energy subsidies and secured a $2.9 billion rescue package from the International Monetary Fund.

Both Wickremesinghe and the IMF have said the South Asian nation was “gradually” emerging from the crisis following the austerity measures.

The International Monetary Fund (IMF) and Sri Lanka have reached recently a staff-level agreement on economic policies to conclude the second review of a four-year bailout programme, the global lender said. The review, once approved by the IMF’s board, will release $337 million in funding for the island nation.

Sri Lanka defaulted on its overseas debt in May 2022 after a severe shortage of foreign exchange reserves triggered the worst financial crisis since independence from Britain in 1948.

It has since made progress on about $11 billion of bilateral debt restructuring and hopes to have agreements in place with all key creditors, including bondholders, by May at the latest, Foreign Minister Ali Sabry told Reuters last month.