IMF releases fifth tranche of Sri Lanka’s EFF
The International Monetary Fund (IMF) has released the fifth tranche of Sri Lanka’s Extended Fund Facility (EFF).
The Executive Board of the IMF was expected to announce this decision on Friday June 1 after completing the fourth review under an economic reform programme supported by a three-year EFF arrangement for Sri Lanka, Central Bank (CB)’s Senior Deputy Governor Dr. Nandalal Weerasinghe told the Business Times.
He noted that the CB will receive the fifth tranche of EFF amounting to US$246.7 million next week.
He revealed that ‘the IMF Executive Board reached an agreement on the fourth review of the economic reform programme connected to a three-year EFF arrangement.
All the end-December quantitative performance criteria under the programme were met, as the authorities have successfully advanced fiscal consolidation and strengthened international reserves, a recent IMF statement disclosed.
Following subdued growth in 2017 due to the lingering effects of weather-related shocks, a recovery is underway as agriculture has started to rebound and food prices decelerate.
Real GDP growth is expected to reach 4 per cent and inflation to remain below 5 per cent in 2018.
Exports are also recovering and the recent sovereign bond issuance was successfully oversubscribed.
“However, the economy remains vulnerable to adverse shocks given the still sizable public debt, large refinancing needs, and low external buffers,” the IMF said.
“The implementation of automatic fuel pricing mechanism-consistent with the EFF-supported program has led the Board to consider Sri Lanka’s request for completion of the fourth review in June 2018.
The measure would represent a major step towards completing energy pricing reforms in 2018,’’ the IMF said.
The IMF noted that progress in implementing the Inland Revenue Act (IRA) and other revenue measures in the 2018 budget remains essential for meeting social goals and improving debt dynamics.