The Executive Board of the International Monetary Fund (IMF) will meet on February 28 to assess the third review of Sri Lanka’s economic reform program. On Monday, Sri Lanka President Anura Kumara Dissanayake presented the budget, targeting a fiscal deficit of 6.7% of GDP. A strict management of budget deficit has been part of IMF targets under the financing package. The IMF approved a 2.9 billion USD extended fund facility in March 2023 that is available to the island nation over a 48-month period.

Since 2015, the country has faced repeated currency crises due to loose monetary policies and high external borrowings beyond budgetary requirements. During the peak of the crisis in 2022, Sri Lanka had an acute shortage of essentials requiring a reworking of macroeconomics to put it back on the path of recovery. The IMF’s decision will be crucial for Sri Lanka’s economic stability and access to further financial assistance.