INSUBCONTINENT EXCLUSIVE:
macroeconomic and social stability, the International Monetary Fund (IMF) has stated.On July 1, 2025, the Executive Board of the IMF
completed the Fourth review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing Sri Lanka to draw approximately US$350
million.This brings the total IMF financial support disbursed so far to approximately US$1.74 billion.According to the IMF, performance
under the program has been generally strong with some implementation risks being addressed.Prior actions on restoring cost-recovery
electricity pricing for the rest of 2025 and operationalizing automatic electricity tariff adjustment were met by the government, the IMF
All structural benchmarks due by end-May 2025 were either met or implemented with delay
2025Q2 inflation fell below the lower outer band of the Monetary Policy Consultation Clause largely due to energy prices
20, 2023 in an amount of apprximately US$3 billion
protecting the vulnerable, (ii) safeguarding price and financial sector stability, (iii) rebuilding external buffers, (iv) strengthening
governance and reducing corruption vulnerabilities, and (v) enhancing growth-oriented structural reforms.The IMF stated that the Executive
Board reviewed a report from the Managing Director on the inadvertent provision of inaccurate data by Sri Lanka on the ceiling of the
The authorities have worked openly and closely with IMF staff to provide corrected data and have undertaken several corrective measures
related to the clearing and reporting of arrears
They are also committed to improving reporting and data verification practices going forward in line with IMF technical assistance
Fund-supported arrangement is generally strong with some implementation risks being addressed
Reforms are bearing fruit, with economic growth strengthening, inflation remaining low, reserves accumulating, and fiscal revenues improving
The debt restructuring process is nearing completion
The economic outlook is positive, but downside risks have increased
In case shocks materialize, the authorities should work closely with the Fund to assess the impact and formulate policy responses within the
Strengthening tax exemption frameworks, boosting tax compliance, and enhancing public financial management to ensure effective arrears
Further improving the coverage and targeting of social support to the vulnerable is also necessary
A smoother execution of capital spending within the fiscal envelope would help foster medium-term growth
The restoration of cost-recovery electricity pricing and the operationalization of automatic electricity tariffs adjustment are commendable
to prioritize price stability, supported by sustained commitment to eliminate monetary financing and safeguard central bank independence
Greater exchange rate flexibility and gradually phasing out administrative balance of payments measures remain critical to rebuild external
The government should continue to implement governance reforms and advance trade-facilitation reforms to boost export growth and
The noncomplying purchases arose as a result of the provision of inaccurate information by the authorities on the stock of expenditure
arose because of weaknesses in the timely reporting of arrears by line ministries to the Ministry of Finance, as well as a misunderstanding
accruing arrears or inaccurate reporting of information going forward
In view of the above, the Executive Board agreed to grant waivers for the nonobservances of the quantitative performance criterion that gave
rise to the noncomplying purchases and decided not to require further action in connection with the breach of obligations under Article
