IMF Third Review On Sri Lanka : What You Need to Know

COLOMBO (News 1st); The IMF Executive Board completed the Third Review under the 48-month Extended Fund Facility with Sri Lanka, providing the country with immediate access to about US $334 million to support its economic policies and reforms.

Here are the key points:

The IMF Executive Board completed the third review under the 48-month EFF Arrangement.

This allows Sri Lanka to draw about US$334 million.

Total IMF financial support disbursed so far is about US$1.34 billion.

Reforms are yielding positive results with remarkable economic recovery.

Inflation remains low, revenue collection is improving, and reserves are accumulating.

Economic growth averaged 4.3% since Q3 2023.

Real GDP is estimated to recover 40% of the loss incurred between 2018 and 2023 by end-2024.

Recovery expected to continue in 2025.

Strong performance with all quantitative targets met, except for social spending.

Most structural benchmarks due by end-January 2025 were met or implemented with delay.

Sustained revenue mobilization is crucial for fiscal sustainability and essential services.

Boosting tax compliance and refraining from tax exemptions are key.

Meeting social spending targets and reforming the social safety net are important for inclusive growth.

Restoring cost-recovery electricity pricing is needed to contain fiscal risks from state-owned enterprises.

Smoother execution of capital spending within the fiscal envelope would foster medium-term growth.

Prioritize maintaining price stability.

Prohibit monetary financing and safeguard Central Bank independence.

Continued exchange rate flexibility and phasing out balance of payments measures are critical.

Resolve non-performing loans and strengthen governance and oversight of state-owned banks.

Improve insolvency and resolution frameworks to revive credit growth.

Address prolonged structural challenges to unlock long-term potential.

Implement governance reforms steadfastly.