Sri Lanka’s submission of inaccurate financial data to the International Monetary Fund (IMF) has come under scrutiny by the IMF’s Executive Board.
According to an IMF statement, the Board reviewed a report from the Managing Director concerning Sri Lanka’s inadvertent under-reporting of central government expenditure arrears. This under-reporting, identified through a detailed analysis of budget line appropriations, resulted in non-complying purchases and a breach of the country’s obligations under Article VIII, Section 5 of the IMF’s Articles of Agreement.
The inaccuracies were found to be unintentional and stemmed from delays in arrears reporting by line ministries to the Ministry of Finance, as well as a misunderstanding of the IMF’s definition of “arrears” under the Technical Memorandum of Understanding.
The authorities have since worked transparently and cooperatively with IMF staff to correct the data and implement several corrective actions. They also confirmed that repayments of the identified arrears will be made within the current fiscal framework.
Deputy Managing Director and Acting Chair Kenji Okamura stated that the Executive Board acknowledged Sri Lanka’s corrective measures and its commitment to strengthening public financial management systems under the new Public Financial Management (PFM) law.
In light of these actions, the Board agreed to grant waivers for the violations of the quantitative performance criteria and decided not to pursue further action regarding the breach of Article VIII obligations.
