IMF reaches staff-level agreement with Sri Lanka on fourth review

The International Monetary Fund (IMF) and Sri Lanka reached a staff-level agreement on the Fourth Review of Sri Lanka?s reform program supported by the IMF?s 48-month Extended Fund Facility (EFF) arrangement.

The EFF was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

?The staff-level agreement is subject to IMF Executive Board approval, contingent on: (i) the implementation of prior actions relating to restoring electricity cost-recovery pricing and ensuring proper function of the automatic electricity price adjustment mechanism; and (ii) the completion of financing assurances review, which will focus on confirming multilateral partners? committed financing contributions and adequate debt restructuring progress,” IMF Mission Chief for Sri Lanka Evan Papageorgiou said.

Upon completion of the Executive Board review, Sri Lanka would have access to SDR254 million (about US$344 million), bringing the total IMF financial support disbursed under the arrangement to SDR1,270 million (about US$1,722 million).

?Sri Lanka?s ambitious reform agenda continues to deliver commendable outcomes. The post-crisis growth rebound of 5 percent in 2024 is remarkable. Revenue mobilization reforms had improved revenue-to-GDP ratio to 13.5 percent in 2024, from 8.2 percent in 2022. Gross official reserves reached US$6.5 billion at end-March 2025 given sizeable foreign exchange purchases by the central bank. Substantial fiscal reforms have strengthened public finances. Sri Lanka?s debt restructuring is nearly complete,” Evan Papageorgiou said.

Papageorgiou said that the program performance remains strong overall and based on preliminary data, most end-March quantitative targets for which data is available were met.

Most structural benchmarks due by end-April were either met or implemented with delay. However, the continuous structural benchmark on cost-recovery electricity pricing remains not met. Inflation remains below the Monetary Policy Consultation target band.

The new government?s sustained commitment to program objectives has enhanced confidence and ensures policy continuity. Going forward, sustaining reform momentum including by reducing corruption vulnerabilities, is critical to safeguard the hard-won gains, durably restore macroeconomic and debt sustainability, and unlock robust and inclusive growth, the IMF said.

The IMF team held meetings in Washington DC with Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Mr. K M Mahinda Siriwardana, and other senior officials.