US welcomes IMF board approval for Sri Lanka

by Zulfick Farzan 14-12-2023 | 10:26 AM

COLOMBO (News 1st); The United States of America has welcomed the IMF Executive Board approval for Sri Lanka's first Extended Fund Facility review.

"We welcome the positive news from the IMF Board about the completion of the first Extended Fund Facility review with Sri Lanka, providing access to about $337 million for Sri Lanka to use to support its economic reforms and policies," said US Ambassador to Sri Lanka Julie Chung.

She said that this crucial step for Sri Lanka emphasizes the continued importance of sustained reforms, and improved governance for the country’s progress, while safeguarding the most vulnerable.

The Ambassador said that the United States will continue to support Sri Lanka’s path to economic stability and prosperity.

On Wednesday (12), the IMF Board completed the first review under the 48-month Extended Fund Facility with Sri Lanka, providing the country with access to about US$ 337 million to support its economic policies and reforms.

The IMF said that Sri Lanka’s performance under the program was satisfactory.

"All but one performance criteria and all but one indicative targets were met at end-June. Most structural benchmarks due by end-October 2023 were either met or implemented with delay," it added.

Summary of the IMF's first review of Sri Lanka's EFF program:

Positive results:

Macroeconomic stabilization: Rapid disinflation, fiscal adjustment, and reserve build-up.

Program performance:Satisfactory, with most targets met.

Debt restructuring:Agreements in principle with official creditors and China, paving the way for debt sustainability.

Governance: Publication of a Governance Diagnostic Report as a first step towards addressing corruption.

Challenges and priorities:

Sustaining the reform momentum: Key areas include revenue mobilization, energy pricing, social safety nets, external buffers, financial stability, and anti-corruption.

Fiscal consolidation: Reinforcing revenue-based measures to avoid program slippages and improve on past shortcomings.

Disinflation: Central bank to maintain its multi-pronged strategy and build reserves.

Financial sector: Implement bank recapitalization and strengthen supervision to safeguard stability.

Social safety net: Protect vulnerable populations through further strengthening.

Overall:

The IMF is optimistic about Sri Lanka's progress under the EFF program, but continued commitment and strong ownership of reforms are crucial for a full and swift recovery.