Sri Lankan authorities announced that they have reached Staff-Level Agreement with the International Monetary Fund (IMF) on a four-year programme (the Programme to be supported by an arrangement under the Extended Fund Facility (EFF) )in the sum of about US$ 2.9 billion.
The announcement was made at the end of the mission conducted from 24 August in Colombo, where the IMF staff team for Sri Lanka held numerous meetings with the Ministry of Finance and the Central Bank of Sri Lanka, to agree on a package of reforms aimed at restoring macroeconomic stability and public finance sustainability in the country.
The agreed economic reform package is designed to address comprehensively the challenges currently faced by Sri Lanka. The programme’s objectives are (i) to restore public finance sustainability through fiscal adjustment and debt restructuring, while protecting the most vulnerable and preserving financial stability, (ii) to bring back price stability and build external buffers, and (iii) to unlock the country’s growth potential through structural reforms and improvement in governance.
Reaching Staff-Level Agreement with the IMF was one of the immediate objectives of the Government and a directive by the President since he was elected last month. The Authorities will now work on implementing the prior actions agreed under the SLA and on securing the financing assurances needed from Sri Lanka’s official bilateral creditors in order to obtain adoption of the programme by the IMF Executive Board.
The Authorities have been working with their international financial and legal advisers on their debt restructuring strategy. The Authorities further intend to make a presentation to creditors in the next few weeks to update them on the most recent macroeconomic developments in the country, the main areas of the reform package agreed with the IMF staff and the next steps of the debt restructuring process.