In a historic move, the International Monetary Fund (IMF) has approved Sri Lanka’s program under the Extended Fund Facility (EFF). The decision was made by the IMF Executive Board, paving the way for Sri Lanka to access financing of up to US$ 7 billion from the IMF, International Financial Institutions (IFIs) and multilateral organizations.
This development is a significant milestone for Sri Lanka, which seeks to restore macroeconomic stability and achieve debt sustainability. The program comes after Sri Lanka received IMF-compatible financing assurances earlier this month from its official creditors, including Paris Club members, India, and China.
With the approval of the program, Sri Lanka is expected to receive much-needed policy space to address the unprecedented challenges faced by its economy and instill confidence among all stakeholders. The government can now drive the economy towards recovery, boosted by the support of the IMF and other financial institutions.
The program’s approval is an indication of the IMF’s confidence in Sri Lanka’s commitment to implementing the necessary reforms to achieve economic stability and sustainability. Sri Lanka’s successful implementation of the program will also have positive spillover effects on the wider South Asian region.
Overall, the approval of Sri Lanka’s program under the EFF marks a crucial turning point for the country, with the potential to transform its economy and create a path towards long-term prosperity.
President Ranil Wickremesinghe 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.”