IMF agreement with Sri Lanka must depend on key reforms: US senate committee

United States Senate Foreign Relations Committee says the International Monetary Fund’s agreement with Sri Lanka must be contingent on Central Bank independence, strong anti-corruption measures and promotion of the rule of law.

“Without these critical reforms, Sri Lanka could suffer further economic mismanagement & uncontrollable debt,” the committee said further in a tweet.

Any @IMFNews agreement with #SriLanka must be contingent on @CBSL independence, strong anti-corruption measures & promotion of the rule of law. Without these critical reforms, Sri Lanka could suffer further economic mismanagement & uncontrollable debt. https://t.co/oMdT7QIwZP

— Senate Foreign Relations Committee (@SFRCdems) July 1, 2022

The IMF, upon concluding the mission staff’s visit to Sri Lanka earlier this week, stated that talks with Sri Lankan authorities made “significant progress” on defining a macroeconomic and structural policy package.

An IMF mission team led by Peter Breuer and Masahiro Nozaki visited Colombo from June 20 to 30 to discuss the Fund’s support for Sri Lanka and the authorities’ comprehensive economic reform program.

The IMF team also reaffirmed its commitment to support Sri Lanka at this difficult time in line with the IMF’s policies.

The team said it had constructive and productive discussions with the Sri Lankan authorities on economic policies and reforms to be supported by an IMF Extended Fund Facility (EFF) arrangement.

The staff team and the authorities made significant progress on defining a macroeconomic and structural policy package, according to the statement.

“The discussions will continue virtually with a view to reaching a staff-level agreement on the EFF arrangement in the near term. Because public debt is assessed as unsustainable, Executive Board approval would require adequate financing assurances from Sri Lanka’s creditors that debt sustainability will be restored,” the team said further.