The International Monetary Fund (IMF) announced a staff-level agreement with Sri Lanka following the completion of its third review under the 2.9 billion USD financing programme.
Addressing a media briefing, senior mission chief of IMF Peter Breuer stressed that continued reform momentum is essential for building a stable and inclusive future for Sri Lanka. He added that subsequent to approval from the IMF Executive Board for the third review, Sri Lanka will receive an additional 330 million USD, raising the total disbursed amount under the package to 1.3 billion USD.
Mr. Breuer added that the IMF’s board will formally approve the review based on several prior action including a budget for 2025.
The IMF has lauded Sri Lanka’s progress, including an average GDP growth of 4% over the past year, inflation remaining under control, and a rise in gross official reserves to $6.4 billion by October 2024.
However, it emphasized the need for sustained reforms, particularly in fiscal policy, debt restructuring, and social welfare programs like Aswesuma to protect vulnerable populations.
The IMF team has said that Government representatives, led by Deputy Minister Prof. Anil Jayantha Fernando, have assured commitment to program goals, including responsible budget planning for 2025 and enhanced tax compliance.
With public finances improving and a recent Agreement in Principle with bondholders, Sri Lanka is making strides toward restoring debt sustainability and economic stability.
The financing programme, approved in March 2023, provides Sri Lanka with access to 2.9 billion USD over four years to stabilize its economy and implement structural reforms. The agreement is a critical milestone in Sri Lanka’s economic recovery program, initiated after the country’s severe financial crisis in 2022.
During the election campaign, President Anura Kumara Dissanayake had stated that his government would renegotiate the IMF agreement to relax austerity measures. However, while presenting the policy statement of his government earlier this week, he said that the economic recovery was too fragile to take risks hinting that his government would go ahead with the agreement entered by the previous government.
