Colombo
Sri Lanka has achieved a significant milestone as it has secured a staff-level agreement on the initial review of the Extended Fund Facility (EFF) Arrangement with the International Monetary Fund (IMF), paving the way for the country to receive the next tranche of funds from its $3 billion bailout program. According to IMF Senior Mission Chief for Sri Lanka, Peter Breuer, the island nation is anticipated to access approximately $330 million in financing following the approval of the review, as stated during a virtual press briefing.
Additionally, the statement issued earlier by Breuer and Deputy Mission Chief Katsiaryna Svirydzenka highlighted the significant fiscal adjustment expected to be realized by the end of this year. The nation has also witnessed improvements in areas such as gross international reserves, with a $1.5 billion increase during March-June this year, and the alleviation of essential commodity shortages.
Despite these positive developments, the IMF cautioned that sustained efforts are necessary to ensure a comprehensive economic recovery. While there have been early signs of stabilization, the country continues to face challenges, with real GDP contracting by 3.1 per cent year-on-year in the second quarter and ongoing mixed signals from high-frequency economic indicators.
In light of these circumstances, the IMF emphasized the critical importance of maintaining the momentum of reforms to steer the economy toward sustained recovery and cultivate stable, inclusive economic growth. The IMF had previously approved a 48-month extended arrangement under the EFF in March, aiming to provide support for Sri Lanka’s economic policies and reforms.
