The Executive Board of the International Monetary Fund (IMF) has approved the Extended Fund Facility to Sri Lanka at its board meeting held today, according to State Minister of Finance Shehan Semasinghe.
He further said that President Ranil Wickremesinghe will make a special statement on this tomorrow (21).
The International Monetary Fund (IMF) has announced that the IMF Executive Board approved Sri Lanka’s program under the Extended Fund Facility (EFF), the President’s Media Division also confirmed.
The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.
This is a historic milestone for the country as the Government seeks to restore macroeconomic stability and achieve debt sustainability, the PMD reported.
Earlier this month, Sri Lanka received IMF-compatible financing assurances from its official creditors, including Paris Club members, India and China, allowing the IMF to convene an Executive Board and consider Sri Lanka’s request for a loan.
The program is expected to provide much-needed policy space to drive the economy out of the unprecedented challenges and instill confidence amongst all the stakeholders.
Sri Lanka reached a Staff-Level Agreement with the IMF on a four-year program supported by the Extended Fund Facility on 1st September 2022. The program, amounting to US$ 3bn, is expected to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and safeguarding Sri Lanka’s financial system.
Since September, the Government of Sri Lanka has held official creditor meetings to update stakeholders on the country’s reform agenda and share information transparently as well as engaging with commercial creditors.
Following the IMF Executive Board approval, the disbursement of the first tranche under this program is expected to take place in the coming days.
President Ranil Wickremesinghe has welcomed the announcement:
“In the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic future. Our official creditors have declared their support following continuous and positive engagements over the last few months, and we are pleased that the IMF Executive Board approved our program, enabling Sri Lanka to access up to US$ 7 billion in funding from the IMF and IFIs. From the very start, we committed to full transparency in all our discussions with financial institutions and with our creditors. I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda.
Since taking office last July, it has been my priority to stabilize Sri Lanka’s economy and achieve sustainable levels of debt. To do so, we have taken some tough decisions, but we did so with a commitment to widening our social safety nets, protecting the vulnerable, rooting out corruption and ensuring we can grow an inclusive and internationally attractive economy. The IMF program is critical to achieving this vision for our country, and we are committed to successfully completing the IMF program and achieving debt sustainability. We will continue to engage with all our creditors, and I encourage both our bilateral and commercial creditors to strengthen and foster coordination in the context of our forthcoming engagement. The IMF program will also be imperative to improving Sri Lanka’s standing in and access to international capital markets, and it will demonstrate that Sri Lanka is once again a country attractive to talent, investors and tourists.”
IMF also released their statement about the IMF grant, which is as follows
Press Release No. 23/79
IMF Executive Board Approves US$3 Billion Under the New Extended Fund Facility (EFF) Arrangement for Sri Lanka
Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today a 48‑month extended arrangement under the Extended Fund Facility (EFF) with an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion).
Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis. The economy is facing 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.
The EFF-supported program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential. The Executive Board’s decision will enable an immediate disbursement equivalent to SDR 254 million (about US$333 million) and catalyze financial support from other development partners.
Following the Executive Board discussion on Sri Lanka, Ms. Kristalina Georgieva, Managing Director, issued the following statement:
“Sri Lanka has been facing tremendous economic and social challenges with a severe recession amid high inflation, depleted reserves, an unsustainable public debt, and heightened financial sector vulnerabilities. Institutions and governance frameworks require deep reforms. For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical.
“Ambitious revenue-based fiscal consolidation is necessary for restoring fiscal and debt sustainability while protecting the poor and vulnerable. In this regard, the momentum of ongoing progressive tax reforms should be maintained, and social safety nets should be strengthened and better targeted to the poor. For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical.
“Having obtained specific and credible financing assurances from major official bilateral creditors, it is now important for the authorities and creditors to make swift progress towards restoring debt sustainability consistent with the IMF-supported program. The authorities’ commitments to transparently achieve a debt resolution, consistent with the program parameters and equitable burden sharing among creditors in a timely fashion, are welcome.
“Sri Lanka should stay committed to the multi-pronged disinflation strategy to safeguard the credibility of its inflation targeting regime. As the market regains confidence, the authorities’ recent introduction of greater exchange rate flexibility will help to rebuild the reserve buffer.
“Maintaining a sound and adequately capitalized banking system is important. Implementing a bank recapitalization plan and strengthening financial supervision and crisis management framework are crucial to ensure financial sector stability.
“The ongoing efforts to tackle corruption should continue, including revamping anti-corruption legislation. A more comprehensive anti-corruption reform agenda should be guided by the ongoing IMF governance diagnostic mission that conducts an assessment of Sri Lanka’s anti-corruption and governance framework. The authorities should step up growth-enhancing structural reforms with technical assistance support from development partners.”
He further said that President Ranil Wickremesinghe will make a special statement on this tomorrow (21).
The International Monetary Fund (IMF) has announced that the IMF Executive Board approved Sri Lanka’s program under the Extended Fund Facility (EFF), the President’s Media Division also confirmed.
The program will allow Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.
This is a historic milestone for the country as the Government seeks to restore macroeconomic stability and achieve debt sustainability, the PMD reported.
Earlier this month, Sri Lanka received IMF-compatible financing assurances from its official creditors, including Paris Club members, India and China, allowing the IMF to convene an Executive Board and consider Sri Lanka’s request for a loan.
The program is expected to provide much-needed policy space to drive the economy out of the unprecedented challenges and instill confidence amongst all the stakeholders.
Sri Lanka reached a Staff-Level Agreement with the IMF on a four-year program supported by the Extended Fund Facility on 1st September 2022. The program, amounting to US$ 3bn, is expected to restore macroeconomic stability and debt sustainability while protecting vulnerable groups and safeguarding Sri Lanka’s financial system.
Since September, the Government of Sri Lanka has held official creditor meetings to update stakeholders on the country’s reform agenda and share information transparently as well as engaging with commercial creditors.
Following the IMF Executive Board approval, the disbursement of the first tranche under this program is expected to take place in the coming days.
President Ranil Wickremesinghe has welcomed the announcement:
“In the 75 years of Sri Lanka’s independence, there has never been a more critical period for our economic future. Our official creditors have declared their support following continuous and positive engagements over the last few months, and we are pleased that the IMF Executive Board approved our program, enabling Sri Lanka to access up to US$ 7 billion in funding from the IMF and IFIs. From the very start, we committed to full transparency in all our discussions with financial institutions and with our creditors. I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda.
Since taking office last July, it has been my priority to stabilize Sri Lanka’s economy and achieve sustainable levels of debt. To do so, we have taken some tough decisions, but we did so with a commitment to widening our social safety nets, protecting the vulnerable, rooting out corruption and ensuring we can grow an inclusive and internationally attractive economy. The IMF program is critical to achieving this vision for our country, and we are committed to successfully completing the IMF program and achieving debt sustainability. We will continue to engage with all our creditors, and I encourage both our bilateral and commercial creditors to strengthen and foster coordination in the context of our forthcoming engagement. The IMF program will also be imperative to improving Sri Lanka’s standing in and access to international capital markets, and it will demonstrate that Sri Lanka is once again a country attractive to talent, investors and tourists.”
IMF also released their statement about the IMF grant, which is as follows
Press Release No. 23/79
IMF Executive Board Approves US$3 Billion Under the New Extended Fund Facility (EFF) Arrangement for Sri Lanka
- The IMF Board approved a 48-month extended arrangement under the Extended Fund Facility (EFF) of SDR 2.286 billion (about US$3 billion) to support Sri Lanka’s economic policies and reforms.
- The objectives of the EFF-supported program are to restore macroeconomic stability and debt sustainability, safeguarding financial stability, and stepping up structural reforms to unlock Sri Lanka’s growth potential. All program measures are mindful of the need to protect the most vulnerable and improving governance.
- Close collaboration between Sri Lanka and all its creditors will be critical to expedite a debt treatment that will restore debt sustainability consistent with program parameters.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today a 48‑month extended arrangement under the Extended Fund Facility (EFF) with an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion).
Sri Lanka has been hit hard by a catastrophic economic and humanitarian crisis. The economy is facing 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.
The EFF-supported program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, safeguard financial sector stability, and strengthen governance and growth potential. The Executive Board’s decision will enable an immediate disbursement equivalent to SDR 254 million (about US$333 million) and catalyze financial support from other development partners.
Following the Executive Board discussion on Sri Lanka, Ms. Kristalina Georgieva, Managing Director, issued the following statement:
“Sri Lanka has been facing tremendous economic and social challenges with a severe recession amid high inflation, depleted reserves, an unsustainable public debt, and heightened financial sector vulnerabilities. Institutions and governance frameworks require deep reforms. For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical.
“Ambitious revenue-based fiscal consolidation is necessary for restoring fiscal and debt sustainability while protecting the poor and vulnerable. In this regard, the momentum of ongoing progressive tax reforms should be maintained, and social safety nets should be strengthened and better targeted to the poor. For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical.
“Having obtained specific and credible financing assurances from major official bilateral creditors, it is now important for the authorities and creditors to make swift progress towards restoring debt sustainability consistent with the IMF-supported program. The authorities’ commitments to transparently achieve a debt resolution, consistent with the program parameters and equitable burden sharing among creditors in a timely fashion, are welcome.
“Sri Lanka should stay committed to the multi-pronged disinflation strategy to safeguard the credibility of its inflation targeting regime. As the market regains confidence, the authorities’ recent introduction of greater exchange rate flexibility will help to rebuild the reserve buffer.
“Maintaining a sound and adequately capitalized banking system is important. Implementing a bank recapitalization plan and strengthening financial supervision and crisis management framework are crucial to ensure financial sector stability.
“The ongoing efforts to tackle corruption should continue, including revamping anti-corruption legislation. A more comprehensive anti-corruption reform agenda should be guided by the ongoing IMF governance diagnostic mission that conducts an assessment of Sri Lanka’s anti-corruption and governance framework. The authorities should step up growth-enhancing structural reforms with technical assistance support from development partners.”
