IMF leaves post-EFF decision to Colombo

Fund says programme ‘delivering very strongly’ as two reviews remain

The International Monetary Fund (IMF) said yesterday (15) that it is for the Government to decide whether Sri Lanka seeks another IMF programme once its Extended Fund Facility (EFF) expires in March. It also said the current arrangement has been “delivering very strongly”.

Deputy Division Chief in the IMF’s Asia and Pacific Department, Sonali Jain-Chandra was responding to a question by The Daily Morning at the department’s press briefing, held on the sidelines of the IMF–World Bank Group Annual Meetings in Bangkok.

“This is the authorities’ prerogative, whether they would like to request a fund programme,” she said.

Jain-Chandra said there were many ways in which the IMF could support Sri Lanka. She listed a new financing arrangement, granular policy advice in the context of surveillance, and capacity development, “of which Sri Lanka is a very significant beneficiary”.

“We stand ready to support Sri Lanka in any way that they desire as appropriate,” she said, adding that “the fund will remain a very committed partner to Sri Lanka”.

Before turning to what lies ahead, Jain-Chandra set out what the programme has achieved. She said the macroeconomic situation is much improved and the revenue ratio has doubled. In contrast to other countries, she said, Sri Lanka’s fiscal performance is “actually very strong”.

The debt restructuring is “largely complete”, and growth has been positive for 11 consecutive quarters since the crisis-era trough. She also cited important structural improvements, including in governance, which she described as “a core part of the programme”.

She said two reviews remain under the current EFF. Staff-level agreement on the seventh review was reached in early October and will go to the IMF Executive Board in the coming weeks. One more review mission will take place before the programme expires in March.

“It’s very important to keep focused on the macroeconomic stabilisation that’s happening and also consolidating the reform gains,” she said.