IMF agrees to extend Sri Lanka Fund Facility

The International Monetary Fund (IMF), in a gesture allowing more time to Sri Lanka for the completion of the economic reform agenda, has reached a staff level agreement with the government to extend the existing fund arrangement for an additional year. The remaining disbursements of the IMF Extended Fund Facility (EFF) will be evenly spread over further one year period subjected to the presentation of the 2019 budget in Parliament consistent with the EFF-supported programme, the IMF said in a media release on Friday.

The Board is expected to consider Sri Lanka’s request for completion of the fifth review in May 2019.

Government authorities are taking steps to complete all the pending actions and structural benchmarks for this review over the next few weeks. “The economy is gradually stabilising after the weak economic per- formance in 2018, in the context of external shocks and domestic political uncertainty” IMF said.

Highlighting the delay in the disbursement of the sixth the tranche of the EFF, the Business Times reported on January 6 that Sri Lanka is considering the possibility of getting an extension to IMF economic reform programme as the 3-year US$1.5 billion EFF is scheduled to end in the first half of this year.

The need to extend this facility arose owing to balance of payment issues along with the challenge of early refinancing of the country’s medium term debt settlements and economic repercussions of the political impasse instigated by the president. Another reason was the delay in releasing the sixth tranche of about $250 million which was due in November or December last year.