President to meet IMF team today for last meeting of EFF review

President Ranil Wickremesinghe is due to meet with the visiting team of the International Monetary Fund (IMF) today (26 Sep.).

This meeting will be the last in the series of meetings held between the IMF team and representatives of the Sri Lankan government since 14 September, when discussions pertaining to the Extended Fund Facility (EFF) programme review commenced.

Following today’s meeting, the two sides will sign an agreement on the second tranche of the IMF’s bailout package.

The inaugural meeting for the IMF’s first review of the EFF for Sri Lanka commenced in Colombo on 14 September, with Finance State Minister Shehan Semasinghe, President’s Senior Adviser on National Security and Chief of Staff Sagala Ratnayaka, President’s Secretary Saman Ekanayake, Advisor to the President on Economic Affairs Dr. R.H.S. Samaratunga, Finance Ministry Secretary Mahinda Siriwardana and Central Bank Governor Dr. Nandalal Weerasinghe representing the Sri Lankan government, while the IMF delegation featured prominent figures such as Peter Breuer (Senior Mission Chief), Katya Svirydzenka (Deputy Mission Chief), Mike Li, Sophia Zhang, Dmitriy Rozhkov, Noda Selim, Sandesh Dhungana, Nui Miao, Mark Adams (virtual), Joei Turkewitz, Nuong Lan Vu.

During the review, Sri Lanka was tasked with convincing the IMF officials that it has met the key goals of the bailout program to continue the debt restructuring efforts that are crucial to its economic recovery process.

The first review was deemed a significant milestone towards securing the second tranche of the IMF loan and enhancing confidence in Sri Lanka’s economic recovery, State Minister of Finance Shehan Semasinghe said, adding that the successful completion of the first IMF review puts the country in a strong position for economic recovery and sets a promising pathway for growth in 2024.

Sri Lanka, grappling with its worst financial crisis in more than seven decades after its foreign exchange reserves depleted to record lows, managed to secure a bailout package of nearly USD 3 billion in March 2023. The IMF’s executive board had approved a 48-month arrangement of SDR 2.286 billion (USD 2.9 billion) supported by the EFF to help Sri Lanka ride out its economic crisis.

The loan program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigating the economic impact on the poor and vulnerable, safeguarding financial sector stability, and strengthening governance and growth potential. It also allows Sri Lanka to access financing of up to USD 7 billion from international financial institutions (IFIs) and multilateral organizations.

Under the IMF program, Sri Lanka has set a target of restructuring its debt for the next 10 years and reducing its debt-to-GDP ratio from the current 120% to about 95% by 2032. However, Sri Lanka still needs to complete talks with key bilateral creditors, including Japan, China and India, before it can take the next step to restructure its debt.