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President Wickremesinghe is one step ahead with the IMF sanction to access to US$ 330 million from its Extended Fund Facility (EFF).
The President’s office is hurriedly allocating funds for many regional development projects.Several projects in the north and east are to be initiated with these funds
IMF’s Detailed Assessment:
The IMF completed the second review under the 48-month EFF Arrangement, allowing Sri Lanka to draw SDR 254 million (about US$336 million), totalling IMF financial support to SDR 762 million (about US$1 billion).
The EFF arrangement aims to restore macroeconomic stability, debt sustainability, mitigate economic impacts on the poor, rebuild external buffers, safeguard financial sector stability, and strengthen governance and growth potential.
Signs of Economic Recovery:
Real GDP expanded by 3% in the second half of 2023.
May 2024 inflation was 0.9%, and gross international reserves increased to US$5.5 billion by the end of April 2024.
Tax revenue increased to 9.8% of GDP in 2023, resulting in a primary balance surplus.
Medium-Term Growth and Risks:
Growth is projected to recover moderately in 2024-25.
Inflation is expected to temporarily increase due to one-off factors.
The current account is expected to remain positive in 2024.
Risks include waning reform momentum, regional conflicts, commodity price volatility, and a global slowdown.
IMF Executive Board’s Comments:
The IMF has commended Sri Lanka’s strong performance under the Fund-supported programme.
The IMF observes that the economy is starting to recover, with improvements in revenue collection and reserve accumulation.
However, the IMF points out that Important vulnerabilities and uncertainties remain, especially regarding debt restructuring and upcoming elections.
