Sri Lanka to get the US$ 330 mn second tranche of EFF next month

By: Staff Writer

Colombo (LNW): The International Monetary Fund (IMF) is likely to approve the disbursement of the US$ 330 million second tranche of its $3 billion Extended Fund Facility to the country, finance ministry sources disclosed.

IMF staff and the Sri Lankan authorities have entered into a staff-level agreement on economic policies to conclude the first review of the 48-month EFF-supported programme following executive board approval last month.

Sri Lanka will have access to a second instalment of the EFF facility in financing once the review is approved by IMF Management and IMF Executive Board, an IMF spokesman revealed.

Macroeconomic policy reforms are starting to bear fruit and the economy is showing tentative signs of stabilisation.

Sustaining the reform momentum and addressing governance weaknesses and corruption vulnerabilities are critical to put the economy on a path towards lasting recovery and stable and inclusive growth.

The clearance of the second installment on the loan package will be approved during the IMF board meeting to be held in November or early December.

According to IMF sources, to move forward, they must be convinced that debt sustainability can be regained.

This conviction is based on the expectation that negotiations will lead to debt treatments which align with the debt targets set at the beginning of the programme in March.

Sri Lanka verifiably met 41 of the 73 trackable commitments that were due for completion by end-October 2023 in its ongoing programme with the International Monetary Fund (IMF), according to the latest update from ‘IMF Tracker’ of Verité Research.

The number of not met commitments was 11 and the status of 21 other commitments were ‘unknown’.

For comparison, by end-September Sri Lanka had verifiably met 40 of the 71 trackable commitments that were due for completion, with 10 ‘not met’ commitments and 21 unknown commitments.

One commitment was verifiably ‘met’ in October. This was obtaining parliamentary approval for the 2023 appropriation bill, with the planned expenditure being in line with the IMF programme.

The commitment to keep the stock of expenditure in arrears at a maximum of LKR 0 by June 2023 was reclassified from ‘unknown’ to ‘not met’ in October. This was the only commitment that became ‘not met’ in October.

The IMF has indicated that its evaluation for the next disbursement is limited to the commitments due up to the end of June. Sri Lanka had verifiably met 33 of the trackable programme commitments and ‘not met’ eight as of end-June.