In a significant achievement for Sri Lanka’s economic recovery, the International Monetary Fund (IMF) Executive Board has completed the first review under the 48-month Extended Fund Facility (EFF) Arrangement, granting the country access to SDR 254 million (approximately US$337 million). The disbursement brings the total IMF financial support to Sri Lanka to SDR 508 million (about US$670 million).
The IMF praised Sri Lanka’s satisfactory performance under the program, noting successful adherence to most performance criteria, indicative targets, and structural benchmarks. Particularly noteworthy is Sri Lanka’s status as the first country in Asia to undergo the IMF Governance Diagnostic exercise, marked by the publication of the Governance Diagnostic Report.
Mr. Kenji Okamura, Deputy Managing Director, highlighted positive signs of stabilization in Sri Lanka’s economy, citing successful macroeconomic policy reforms. Notable achievements include rapid disinflation, significant fiscal adjustment based on revenue, and the accumulation of reserves.
Commending Sri Lanka’s commitment to addressing deep-rooted corruption weaknesses, Okamura emphasized the importance of continued governance improvement and the timely implementation of the Governance Diagnostic Report’s recommendations. He acknowledged agreements-in-principle with official creditors and the Export-Import Bank of China on debt treatments, viewing them as crucial milestones toward debt sustainability.
To ensure a swift and full recovery, Sri Lanka is urged to maintain reform momentum, with priorities including revenue mobilization, energy pricing alignment, social safety net strengthening, external buffer rebuilding, corruption eradication, and governance enhancement.
The IMF underscored the critical role of the Central Bank of Sri Lanka in implementing a disinflation strategy, accumulating reserves, and maintaining exchange rate flexibility. The importance of bank recapitalization, financial supervision, and crisis management framework strengthening for financial sector stability was also emphasized.
In summary, Sri Lanka’s positive economic strides, backed by the IMF’s endorsement and financial support, position the country on a trajectory towards sustained recovery, fiscal resilience, and enhanced governance.
