The International Monetary Fund (IMF) Executive Board has completed the fourth review under the Extended Fund Facility (EFF) arrangement with Sri Lanka. This decision, made on July 1, 2025, allows Sri Lanka to access Special Drawing Rights (SDR) worth approximately $350 million. With this latest disbursement, total financial support from the IMF to Sri Lanka reaches SDR 1.27 billion or about $1.74 billion.
Initially approved in March 2023, the EFF arrangement amounts to SDR 2.286 billion and aims to help Sri Lanka restore macroeconomic stability. The program's objectives include restoring fiscal and debt sustainability, safeguarding price and financial sector stability, rebuilding external buffers, enhancing governance, reducing corruption vulnerabilities, and implementing growth-oriented structural reforms.
A report reviewed by the Executive Board highlighted issues regarding inaccurate data provided by Sri Lanka concerning central government expenditure arrears. These inaccuracies led to noncomplying purchases and a breach of obligations under Article VIII, Section 5 of the IMF's Articles of Agreement. The authorities have since taken corrective measures and committed to improving data reporting practices.
Deputy Managing Director Kenji Okamura commented on Sri Lanka’s performance under the arrangement: "Sri Lanka’s performance under the Fund-supported arrangement is generally strong with some implementation risks being addressed." He noted that economic growth is strengthening while inflation remains low and reserves are accumulating.
Okamura emphasized that sustained revenue mobilization is crucial for fiscal sustainability. He also praised progress in debt restructuring efforts but highlighted that finalizing agreements with remaining creditors should be prioritized.
Regarding monetary policy, Okamura advised prioritizing price stability while ensuring central bank independence. Structural reforms were deemed essential for unlocking potential growth in Sri Lanka's economy.
In response to past inaccuracies in data reporting related to expenditure arrears, Okamura acknowledged: "The inaccuracies in information provided to the IMF were inadvertent...the Executive Board positively considered the authorities’ corrective actions."
The staff report prepared for this consultation will soon be published on the IMF website following consent from Sri Lankan authorities.