IMF optimistic on Sri Lanka’s ability to achieve reforms
The International Monetary Fund’s (IMF)’s first review by a 12-member team on the progress of the fund–supported programme concluded this week indicating a staff-level agreement on the reform programme and the disbursement of the second tranche of IMF in the near term.
Thus, the IMF board approval is just another step on the difficult road ahead for Sri Lanka towards receiving the second US$330 million second tranche of the extended fund facility as the current mission’s review was inconclusive due to the government’s slow reform momentum.
“The team will continue its discussions in the context of the first review with the goal of reaching a staff-level agreement in the near term. We reaffirm our commitment to support Sri Lanka at this difficult time, “senior IMF mission chief Peter Breuer told a media conference on Wednesday.
Sri Lanka needs to implement tough reforms and expedite negotiations with creditors by meeting their preferences for equity of treatment.
Therefore, a key factor apart from debt restructuring for Sri Lanka is to sustain revenue measures in order to raise government tax revenues and rationalise public expenditure.
“The authorities have also made headway on regaining debt sustainability through the execution of the domestic debt restructuring and advancing discussions with external creditors,” he said.
“Executive Board approval of the first programme review requires the completion of financing assurances reviews as Sri Lanka is restructuring its public debt which is in arrears.”
Mr. Breuer said “These financing assurances reviews will focus on whether adequate progress has been made with debt restructuring to give confidence that it will be concluded in a timely manner and in line with the program’s debt targets.”
Answering a question raised by a journalist he noted that in principle the agreement could be reconsidered or renegotiated.
“It's of course a big undertaking and indeed we would want to be sure that the objectives of the programme can still be achieved.”
He said that during this review, it has been made sure that the policies that were agreed at the beginning are still the appropriate policies or do adjustments need to be made as we go along.”