Colombo, March 1 The executive board of the International Monetary Fund (IMF) has announced that it has completed the Third Review under the 48-month Extended Fund Facility (EFF) with Sri Lanka, providing the island nation with an immediate access to Special Drawing Rights (SDR) of SDR 254 million (about US $334 million) to support its recovery from the 2022 bankruptcy.
The IMF stated that Lanka's performance under the programme has been strong and the recent successful completion of the bond exchange is a major milestone towards restoring debt sustainability. Reform efforts are bearing fruit with the recovery gaining momentum, it said. As the economy is still vulnerable, sustaining the reform agenda is critical to put it on a path towards lasting recovery and debt sustainability.
The statement added that the IMF board completed the third review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing the authorities to draw SDR 254 million (about US $334 million). This brings the total IMF financial support disbursed so far to SDR 1.02 billion (about US$1.34 billion)
"Reforms in Sri Lanka are bearing fruit and the economic recovery has been remarkable. Inflation remains low, revenue collection is improving, and reserves continue to accumulate," said Kenji Okamura, IMF Deputy Managing Director, following the discussions.
He added, "the recovery is expected to continue in 2025.The progress to advance the debt restructuring to restore Sri Lanka's debt sustainability is noteworthy".
In 2022, Sri Lanka was hit hard by a catastrophic economic and humanitarian crisis. The economy faced significant challenges stemming from pre-existing vulnerabilities and policy missteps in the lead up to the crisis, further aggravated by a series of external shocks. In 2023, the IMF approved a 48-month extended arrangement under the EFF of SDR 2.286 billion (about US$3 billion) to support Sri Lanka's economic policies and reforms.
Recently, Sri Lanka's Foreign Minister Vijitha Herath appreciated India's 'key role' in supporting the debt restructuring programme in the country.
Called India a "trusted partner", he said, "India extended various forms of assistance amounting to nearly four billion USD in 2022 and was the first nation to extend financial assurances to the IMF, playing a key role in supporting Sri Lanka's debt restructuring programme. During a period of immense challenges for the country, without this support, Sri Lanka's recovery would not have been as swift".
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