The IMF Board is expected to consider Sri Lanka’s request for completion of the third review of its USD 1.5 billion Extended Fund Facility (EFF) in December of this year.
The IMF in a statement issued yesterday stated they had had “constructive discussions with the authorities in Colombo” and that they reached a “staff-level agreement with the Sri Lankan authorities on the third review under an economic reform programme supported by the three year EFF arrangement”.
The request however is subject to the Sri Lankan government passing the 2018 Budget in November in accordance with the EFF supported programme.
The EFF programme had asked that the government incorporate a new Inland Revenue Act and approve a Budget which would continue with fiscal consolidation supported by stronger revenues.
In addition, they have also asked that the, “Central Bank stand ready to head off pressures on inflation and credit growth, while continuing to enhance exchange rate flexibility”.
The IMF team which visited the country at the end of September commended the government on improving the country’s fiscal position and strengthening its international reserves but asked that more be done to reform State Owned Enterprises.
“Upholding the reform momentum will be important for addressing fiscal and external imbalances and meeting the government’s ambitious social and development objectives. Renewed effort toward bolstering competitiveness, improving social protection programmes, and boosting private sector development will be important for making growth more robust and inclusive”, the team further stated at the end of their review.
The IMF thus far has released two tranches of USD 168 million each and the third tranche of USD 168 million was expected in April but was held back due to delays in passing the new Inland Revenue Act.
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