Sunday Times (Sri Lanka)

IMF agrees to unlock EFF second tranche for Sri Lanka after board approval

-

The Internatio­nal Monetary Fund (IMF) reached an understand­ing with Sri Lankan authoritie­s over the disburseme­nt of the US$ 330 million second tranche of its $3 billion Extended Fund Facility to the country, the fund announced on Thursday.

IMF staff and the Sri Lankan authoritie­s have entered into a stafflevel agreement on economic policies to conclude the first review of the 48-month EFF-supported programme following executive board approval.

Sri Lanka will have access to second instalment of the EFF facility in financing once the review is approved by IMF Management and IMF Executive Board, an IMF media release revealed.

Macroecono­mic policy reforms are starting to bear fruit and the economy is showing tentative signs of stabilisat­ion. 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.

The clearance of the second installmen­t on the loan package will be approved during the IMF board meeting to be held in November or early December.

According to IMF sources, to move forward, they must be convinced that debt sustainabi­lity can be regained.

This conviction is based on the expectatio­n that negotiatio­ns will lead to debt treatments which align with the debt targets set at the beginning of the programme in March.

A senior official of the Finance Ministry noted that to achieve this objective, it was essential to have appropriat­e tax policies and tax administra­tion systems in budget 2024 proposals.

However, these reforms alone are insufficie­nt for Sri Lanka to bridge the gap and move away from being one of the countries with the lowest tax revenue in the world.

After concluding domestic debt restructur­ing and agreeing tentative terms with the China Exim bank, the focus is now on how much progress the nation can make in talks with other official creditors, as well as bondholder­s who submitted a proposal that included a 20 per cent haircut and new “macro-linked bonds recently.

Newspapers in English

Newspapers from Sri Lanka