IMF extends fund facility; approves US$ 164.1 m | Sunday Observer

IMF extends fund facility; approves US$ 164.1 m

The International Monetary Fund (IMF) completed the Fifth Review of Sri Lanka’s economic performance under the program supported by an extended arrangement under the Extended Fund Facility (EFF).

Completion of this review, upon the granting of waivers of non-observance for the end‑December 2018 performance criteria on the primary balance and net official international reserves, makes available SDR 118.5 million (about US$ 164.1 million), bringing total disbursements under the arrangement to SDR 833.73 million (about US$ 1.155 billion). The Executive Board also approved an extension of the arrangement by one additional year, until June 2, 2020.

Sri Lanka’s three-year extended arrangement was approved on June 3, 2016, in the amount of about SDR 1.1 billion (US$1.5 billion, or 185 percent of quota in the IMF at the time of approval.

Following the Executive Board’s discussion of the review, Deputy Managing Director and Acting Chair of the Board, Mitsuhiro Furusawa issued a statement.

Excerpts:

“Sustained revenue mobilisation is needed to place public debt on a downward path, while making space for critical public investment and an expansion of the social safety net under well-defined selection criteria. Strengthening the selection and appraisal process of large-scale investment projects and assessing their fiscal affordability is critical, given Sri Lanka’s high public debt. Stronger fiscal rules and a medium-term debt management strategy will support medium-term fiscal consolidation and debt reduction efforts.

“The authorities should renew their efforts to strengthen SOE governance and transparency, including by advancing a restructuring plan for SriLankan Airlines and completing energy pricing reforms.

“The Central Bank of Sri Lanka should continue to pursue a prudent and data-dependent monetary policy.

“Continued implementation of structural reforms is essential to support strong and inclusive growth.”

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