IMF Reaches Staff-Level Agreement on First Review of Sri Lanka's Extended Fund Facility Arrangement.

IMF staff and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the first review of the 48-month EFF-supported program. Sri Lanka will have access to SDR 254 million (about US$330 million) in financing once the review is approved by IMF Management and IMF Executive Board.

'Macroeconomic policy reforms are starting to bear fruit and the economy is showing tentative signs of stabilization,' the IMF staff mission said.

'Sustaining the reform momentum and addressing governance weaknesses and corruption vulnerabilities are critical to put the economy on a path towards lasting recovery and stable and inclusive growth.'

Completion of the review by the IMF's Executive Board requires: (i) the implementation by the authorities of all prior actions; and (ii) the completion of financing assurances reviews.

After constructive discussions with the authorities in Colombo and during the Annual Meetings in Marrakech, IMF Senior Mission Chief for Sri Lanka Peter Breuer and Deputy Mission Chief Katsiaryna Svirydzenka issued the following statement:

'The IMF team reached a staff-level agreement with the Sri Lankan authorities on the first review under an economic reform program supported by a 48-month Extended Fund Facility (EFF) arrangement . The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

'The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board in the period ahead, contingent on: (i) the implementation by the authorities of all prior actions; (ii) the completion of financing assurances reviews, which will include confirming whether adequate progress has been made with debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the program's debt targets.

'Upon approval by the IMF Executive Board, Sri Lanka would have access to SDR 254 million (about US$330 million), bringing the total IMF financial support disbursed under the arrangement to SDR 508 million (about US$660 million).

'The authorities remain committed to the ambitious reform agenda under the EFF and their reform efforts have been commendable, including rapid disinflation and a significant fiscal adjustment expected by the end of this year. Program performance at end-June was satisfactory, with all quantitative performance criteria for end-June met, except the one on...