INSUBCONTINENT EXCLUSIVE:
IMF personnel and the Sri Lankan authorities have actually reached staff-level agreement on economic policies to conclude the third review
of Sri Lankas financial reform program supported by the IMFs Extended Fund Facility (EFF)
Once the review is authorized by IMF Management and completed by the IMF Executive Board, Sri Lanka will have access to about US$ 333
million in financing, a statement said.The brand-new governments commitment to the program objectives has boosted confidence and ensures
policy connection, it said, adding that sustaining the reform momentum is important to protecting the hard-won gains under the program so
far and putting the economy on a course towards long lasting healing and steady and inclusive growth.The IMFs Executive Board will think
about completion of the review based upon the implementation by the authorities of previous actions; and the completion of funding
guarantees examine, validating multilateral partners funding contributions and examining appropriate development with debt restructuring,
the declaration added.An International Monetary Fund (MF) group led by Peter Breuer, Senior Mission Chief for Sri Lanka, visited Colombo
from November 17 to 23, 2024
After useful conversations in Colombo, Mr
Breuer and Deputy Mission Chief Ms
Katsiaryna Svirydzenka issued the following declaration: We are delighted to announce that the IMF group reached staff-level arrangement
with the Sri Lankan authorities on the third evaluation under the 4-year Extended Fund Facility (EFF) plan
The plan was authorized by the IMF Executive Board for an overall quantity of SDR 2.3 billion (about US$ 3 billion) on March 20, 2023
The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board, contingent on: (i) the implementation by
the authorities of previous actions consisting of the submission of a 2025 budget constant with program objectives; and (ii) the conclusion
of funding guarantees examine, which will concentrate on validating multilateral partners committed funding contributions and whether
appropriate development has actually been made with the debt restructuring to provide self-confidence that the restructuring will be
concluded in a prompt way and in line with the programs financial obligation targets.Upon conclusion of the Executive Board review, Sri
Lanka would have access to SDR 254 million (about US$ 333 million), bringing the overall IMF financial support paid out under the
arrangement to SDR 1,016 million (about US$ 1,333 million)
Sri Lankas enthusiastic reform program supported by the EFF is providing good outcomes
The economy expanded typically by 4 percent y-o-y in the four quarters ending in June 2024
High-frequency signs point to ongoing growth throughout all sectors
Typical heading and core inflation stayed contained at 0.8 and 3.8 percent during the third quarter
Gross official reserves increased to US$ 6.4 billion at end-October 2024 with large forex purchases by the Central Bank
Public financial resources have strengthened following substantial financial reforms.Program performance was strong, with all quantitative
performance criteria and indicative targets (IT) for end-June 2024 met, as well as the ITs for end-September 2024, except for the IT on
A lot of structural criteria due before October-2024 were either fulfilled or implemented with hold-up; some standards are postponed due to
the fact that of the election cycle.The brand-new federal governments commitment to the program objectives has actually improved confidence
and ensures policy continuity
Sustaining the reform momentum is important to securing the hard-won gains of the program and putting the economy on a path towards lasting
healing and stable and inclusive development
Because the crisis has actually affected Sri Lankas entire population, it will be important to make sure that the take advantage of economic
development are shared appropriately.Maintaining macroeconomic stability and restoring financial obligation sustainability are crucial to
protecting Sri Lankas prosperity and need persevering with accountable fiscal policy
Continued income mobilization efforts and costs restraint are required to prepare the 2025 budget in line with program criteria
Earnings administration reforms and efforts to enhance tax compliance will assist to make sure that the burden originating from the crisis
is shared proportionately to taxpayers ability to contribute
Avoiding brand-new tax exemptions will help in reducing fiscal revenue leaks, corruption dangers and build much required financial buffers,
including for social costs and to support Sri Lankas most susceptible
Preserving expense healing in fuel and electricity prices and dealing with legacy financial obligations will assist reduce fiscal threats
emerging from state-owned enterprises.The government has an important responsibility to safeguard the bad and susceptible at this
It is essential to redouble efforts to satisfy the programs minimum costs target on social spending and to enhance targeting, adequacy, and
coverage of social safety nets, especially Aswesuma.While inflation has actually decreased faster than expected, continued tracking is
necessitated to make sure continual rate stability and assistance macroeconomic stability
Versus ongoing worldwide uncertainty, it stays important to continue reconstructing external buffers through strong reserves
accumulation.Sri Lankas current Agreement in Principle with bondholders is a crucial milestone putting Sri Lankas debt on a course towards
The important next actions are to complete the commercial financial obligation restructuring, complete bilateral contracts with official
financial institutions along the lines of the accord with the Official Creditor Committee and carry out the regards to the other contracts
This will assist bring back Sri Lankas financial obligation sustainability.The new governments mandate will revitalize governance reforms
attending to corruption risks, reconstructing economic confidence, and making growth more robust and inclusive.The IMF team convened with
His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Labor Minister and Deputy Minister of Economic Development
Anil Jayantha Fernando, Honorable Deputy Minister of Finance and Planning Dr
Harshana Suriyapperuma, Senior Economic Advisor Duminda Hulangamuwa, Central Bank of Sri Lanka Governor Dr
Nandalal Weerasinghe, Secretary to the Treasury Mr
K M Mahinda Siriwardana, and other senior federal government and CBSL officials
The team also consulted with Parliamentarians, representatives from the economic sector, civil society organizations, and advancement
partners.We would like to thank the authorities for the excellent cooperation.
