An International Monetary Fund (IMF) team led by Peter Breuer, Senior Mission Chief for Sri Lanka, visited Colombo from November 17 to 23, 2024. The visit concluded with a staff-level agreement on the third review under Sri Lanka's Extended Fund Facility (EFF) arrangement. This was confirmed in a statement issued by Mr. Breuer and Deputy Mission Chief Ms. Katsiaryna Svirydzenka.
The EFF arrangement, approved by the IMF Executive Board on March 20, 2023, amounts to SDR 2.3 billion (approximately US$3 billion). The recent agreement is subject to approval by IMF management and the Executive Board. It depends on the implementation of prior actions by Sri Lankan authorities and a financing assurances review.
Upon completion of the Executive Board review, Sri Lanka would gain access to SDR 254 million (about US$333 million), bringing total disbursements under this arrangement to SDR 1,016 million (about US$1,333 million).
"Sri Lanka’s ambitious reform agenda supported by the EFF is delivering commendable outcomes," stated Breuer and Svirydzenka. The economy grew at an average rate of four percent year-on-year up until June 2024. Inflation rates remained low during the third quarter while gross official reserves increased significantly.
The program performance has been strong with all quantitative performance criteria met except for social spending targets due to delays linked to election cycles.
"The new government’s commitment to the program objectives has enhanced confidence and ensures policy continuity," they added. They emphasized maintaining macroeconomic stability and restoring debt sustainability as key priorities for Sri Lanka's prosperity.
Efforts are needed in revenue mobilization and fiscal restraint for preparing the upcoming budget according to program parameters. Additionally, protecting vulnerable populations through improved social safety nets remains crucial.
"Sri Lanka’s recent Agreement in Principle with bondholders is an important milestone putting Sri Lanka’s debt on a path towards sustainability," noted Breuer and Svirydzenka regarding ongoing debt restructuring efforts.
Meetings were held with several high-ranking officials including President Anura Kumara Dissanayake and Central Bank Governor Dr. P. Nandalal Weerasinghe among others from various sectors within Sri Lanka.
"We would like to thank the authorities for their excellent collaboration," concluded Breuer and Svirydzenka in their statement following discussions in Colombo.