IMF hopes to conclude Sri Lanka’s second review by end of first half of 2024

The International Monetary Fund says its 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, says IMF Senior Mission Chief for Sri Lanka, Peter Breuer.

Additionally, an IMF team is planning to visit the island nation in March or April next year, Mr. Breuer commented further addressing a special virtual media briefing convened this morning.

IMF’s Deputy Mission Chief Katsiaryna Svirydzenka and Resident Representative for Sri Lanka Sarwat Jahan also joined the press briefing, which came after the global lender’s Executive Board finalized the first review on Sri Lanka.

The board’s approval gives access to the much-anticipated second tranche of its loan which adds up to SDR 254 million (about USD 337 million). This will bring the total IMF financial support disbursed thus far to SDR 508 million (approximately USD 670 million).

Meanwhile, the third review is expected to be held on or after October 01, 2024.

In his opening remarks, Mr. Breuer said the IMF’s Executive Board’s approval recognizes the challenging policy actions implemented by Sri Lankan people to put the crisis behind them.

He lauded Sri Lanka’s performance under the 48-month Extended Fund Facility (EFF)-supported program, emphasizing that it was ‘satisfactory’.

Stating that Sri Lanka’s macroeconomic policy reforms have started to bear fruit and the economy is showing signs of stabilization, rapid disinflation and significant revenue-based fiscal adjustment, and reserves build-up, Mr. Breuer urged the authorities to continue to build on these hard-won gains.

He noted that the key to transitioning from stabilization to a full and swift recovery is sustaining the reform momentum and strong ownership of reforms.

The Senior IMF Missions Chief went on to appeal to Sri Lankan authorities to further advance revenue mobilization, align energy prizing with costs, strengthen social safety nets, rebuild external buffers, safeguard financial stability, eradicate corruption and enhance governance.

Speaking on the in-principle agreements Sri Lanka has reached with the Export-Import (Exim) Bank of China and the Official Creditor Committee (OCC), Mr. Breuer said the deals are ‘consistent’ with the EFF-supported program’s targets.

“It is now important for SL authorities and the official creditors to sign the respective Memorandums of Understanding. Timely implementation of the agreements, together with reaching a resolution with external private creditors on comparable terms, should help restore Sri Lanka’s debt sustainability over the medium term.”

The Senior Mission Chief assured that the IMF staff would continue to assist Sri Lankan authorities with creditor coordination in line with its policies.