IMF greenlights the disbursement of US$ 337 million 2nd tranche of EFF for Sri Lanka.
By: Staff Writer
Colombo (LNW):IMF executive board has greenlighted the immediate disbursement of US$ 337 million second tranche of the US$2.9 billion Extended Fund Facility (EFF) arrangement for Sri Lanka.
The approval of the second tranche of the IMF loan follows its executive board’s completion of the first review under the 48-month EFF arrangement.
The IMF’s decision comes after the deal between Official Creditor Committee OCC and Sri Lanka came about a month after the island nation’s agreement with China’s Exim Bank covering about USD 4.2 billion of outstanding debt
On November 29, the Sri Lankan government and the OCC revealed that they had reached an agreement in principle on the financial terms of debt treatment.
The in-principle deal covers approximately USD 5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates.
On November 29, the Sri Lankan government and the OCC revealed that they had reached an agreement in principle on the financial terms of debt treatment.
The in-principle deal covers approximately USD 5.9 billion of outstanding public debt and consists of a mix of long-term maturity extension and reduction in interest rates.
In a statement issued following the Executive Board’s meeting, IMF’s Deputy Managing Director Kenji Okamura commended Sri Lanka’s performance under the EFF-supported program, saying that it has been ‘satisfactory’.
“All quantitative performance criteria for end-June were met, except the one on expenditure arrears. All indicative targets were met, except the one on tax revenues, he added. .”
The completion of the first review paves the way for an immediate disbursement of the much-anticipated second tranche of the IMF loan which amounts to SDR 254 million (approximately US$ 337 million).
This will bring the total IMF financial support disbursed thus far to SDR 508 million (approximately US$ 670 million).
The total amount of Sri Lanka’s EFF Arrangement is SDR 2.286 billion (about USD 3 billion) as of the time of program approval on March 20, 2023.
Sri Lanka plunged into its worst financial crisis in seven decades last year after its foreign exchange reserves dwindled to record lows.
But since locking down the IMF bailout of USD 2.9 billion in March 2023, the island nation has managed to partly stabilize its economy, bring down runaway inflation and rebuild currency reserves.
The EFF program supports Sri Lanka’s efforts to restore macroeconomic stability and debt sustainability, safeguard financial stability, and enhance growth-oriented structural reforms.
Meanwhile, Sri Lanka has reached in-principle deals with the Export-Import (Exim) Bank of China, its largest bilateral creditor, and the Official Creditor Committee (OCC) to restructure its debts.
