IMF Executive Board finalises first EFF review of Sri Lanka

By Rathindra Kuruwita 

IMF’s second review under the 48-month Extended Fund Facility (EFF) arrangement for Sri Lanka is expected to be completed by the end of the first half of 2024, IMF Senior Mission Chief for Sri Lanka, Peter Breuer, told journalists Wednesday morning.

Addressing the IMF’s Virtual Press Briefing on the First Review of Sri Lanka’s EFF Arrangement, he said an IMF delegation is to visit the country in March or April 2024.

On Tuesday night, the IMF’s Executive Board finalised the first EFF review of Sri Lanka.

The third review is expected to be held on or after October 01, 2024, Breuer said.

Breuer went on to say the key to transitioning from stabilidation to a full and swift recovery is sustaining reform momentum and strong ownership of reforms.

He urged Sri Lankan authorities to further advance revenue mobilidation, align energy pricing with costs, strengthen social safety nets, rebuild external buffers, safeguard financial stability, eradicate corruption and enhance governance.

He added that IMF staff would continue to assist Sri Lankan authorities with creditor coordination in line with its policies.

Earlier, the IMF Board completed Sri Lanka’s first review under the 48-month Extended Fund Facility, paving the way for the country to access 337 million U.S. dollars to support its economic policies and reforms.

The IMF said that Sri Lanka had met all but one indicative target at the end of June 2023.

Most structural benchmarks due by end-October 2023 were either met or implemented with delay, the statement said.

The IMF said Sri Lankan authorities have made commendable progress toward restoring debt sustainability, raising revenue, rebuilding reserve buffers, reducing inflation, and safeguarding financial stability.

A strong commitment to improving governance and protecting the poor and vulnerable remains critical, the statement read.

Sri Lanka’s agreements-in-principle with the Official Creditors Committee and Export-Import Bank of China on debt treatments are an important milestone, putting Sri Lanka’s debt on the path towards sustainability, the IMF said.

Sustaining the reform momentum is of paramount importance in steering the economy towards a sustained recovery and fostering stable, inclusive economic growth, said the IMF.

In March this year, the IMF approved a 48-month extended arrangement under EFF of about 3 billion U.S. dollars to support Sri Lanka’s economic policies and reforms.

With this, the total IMF financial support disbursed so far is about 670 million dollars, the IMF said.