The International Monetary Fund (IMF) has completed the third review of Sri Lanka’s 48-month Extended Fund Facility (EFF) program, approving the release of SDR 254 million (about $334 million) to support the country’s economic reforms.
This brings the total IMF disbursement to Sri Lanka under the program to SDR 1.02 billion (about $1.34 billion).
The IMF noted strong performance under the program, with all quantitative targets for December 2024 met, except for social spending targets.
Most structural benchmarks due by January 2025 were either achieved or implemented with delays.
A major milestone in Sri Lanka’s recovery was the successful completion of the bond exchange, which contributes to restoring debt sustainability.
IMF Deputy Managing Director Kenji Okamura praised Sri Lanka’s economic recovery, highlighting low inflation, improved revenue collection, and growing reserves.
The economy has grown by an average of 4.3% since the third quarter of 2023, and by the end of 2024, Sri Lanka is expected to recover 40% of the GDP lost between 2018 and 2023.
However, the IMF warned that sustaining reforms is critical to ensuring long-term stability and debt sustainability.
Key priorities moving forward include boosting tax compliance, maintaining targeted social spending, restoring cost-recovery electricity pricing, and advancing debt restructuring.
The IMF emphasized the importance of maintaining exchange rate flexibility, safeguarding Central Bank independence, and addressing structural challenges to unlock Sri Lanka’s long-term growth potential.
