Sri Lanka will slash the price of 60 essential drugs by 16% from June 15, the Health Minister said on Tuesday, as the country sees a glimmer of relief from its worst financial crisis in decades.

The island off India`s southern coast plunged into crisis last year as its foreign exchange reserves ran out, food and energy prices spiralled and protesting mobs forced the ouster of the country`s then president.

But its fortunes have improved over the last nine months as Sri Lanka secured a $2.9 billion bailout from the International Monetary Fund (IMF), moderated its once soaring inflation and embarked on rebuilding foreign exchange reserves.

The rupee has appreciated about 24% this year, allowing the government to reduce the price of 60 essential medicines, including those used to treat diabetes, heart disease and high blood pressure, Health Minister Keheliya Rambukwella said.

Illustration photo shows various medicine pills in their original packaging in Brussels, Belgium August 9, 2019.

"During the height of the crisis we had to raise prices. There was no choice. Some drug prices were increased by 97%. There were shortages of important drugs but now the currency has appreciated so we are passing that benefit onto consumers," he told reporters at the weekly Cabinet briefing.

Sri Lanka`s healthcare costs moderated to 27.3% in May from 35.4% in April but remain slightly higher than overall headline inflation of 25.2% last month, government data showed.

Helped by a stronger currency, Sri Lanka will also begin rolling back import restrictions on 300-400 items from this week, as per a statement from the finance ministry which gave no further details.

The island introduced import bans on multiple items including vehicles, cosmetics and alcohol in March 2020 but has gradually eased them since last year.

The IMF expects Sri Lanka`s economy to shrink by around 3% this year after a 7.8% contraction last year.