Govt confident of fulfilling prior actions before IMF board meeting

Govt confident of fulfilling prior actions before IMF board meeting – Senior Advisor to President January 12, 2025 

By Lalin Fernandopulle

The Government is confident of completing all prior actions before the International Monetary Fund (IMF) board meets in February, said Senior Advisor to the President, Duminda Hulangamuwa.

He said the enactment of two Bills and the 2025 Budget will take place before the IMF board meeting.

The IMF reached a staff-level agreement with the Government on the third review in November 2024.

The IMF Executive Board is expected to meet next month for the final approval of the review of Sri Lanka’s Extended Fund Facility (EFF) arrangement which would provide Sri Lanka with access to US$333 million.

A team led by Senior Mission Chief for Sri Lanka, Peter Breuer was in Sri Lanka in November to conduct the third review of Sri Lanka’s economic reform program supported by EFF.

Following the visit the global lender issued the following statement.

“The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board, contingent on: 

(i) the implementation by the authorities of prior actions including the submission of a 2025 budget consistent with program objectives; and 

(ii) the completion of financing assurances review, which will focus on confirming multilateral partners’ committed financing contributions and whether adequate progress has been made with the debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the program’s debt targets.

The executive board of the IMF approved an amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

“The completion of the debt restructuring process last year enabled us to upgrade our rating by Fitch and be in a better position to avail the next tranche under the EFF program,” Hulangamuwa said.

Fitch Ratings assigned a ‘CCC+’ foreign-currency rating to Sri Lanka’s governance-linked bonds maturing in 2035 and a ‘CCC+’ local-currency rating to the US dollar step-up bonds maturing in 2038.

On plans to accelerate economic growth he said the immediate plan is to identify key sectors with comparative advantage to drive growth and support them.

“We cannot rely on our 22 million market. We have to expand markets outside our shores. Tourism is the low hanging fruit which has a huge comparative advantage over many regional markets and a natural knock-on effect on a waste segment of the industry that stand to benefit enormously,” he said.

However, there has to be sound infrastructure facilities such as good airports and support services to offer value for money to discerning travellers. Tenders have been called for the expansion of the Bandaranaike International Airport (BIA) and hopefully by next year there will be more flights operating via BIA.

“Developing the IT/BPO industry and taking its benefits to the periphery, boosting the shipping and logistics industry facilities with greater transshipment volume handled, rural agriculture development with high yielding crops, better irrigation systems and harvesting methods to minimise pre and post harvest and boosting productivity in both private and public sector to be competitive are other key areas of the immediate plan to revive the economy,” Hulangamuwa said.⍐