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IMF reaches staff-level agreement with Sri Lanka on fourth review
The International Monetary Fund (IMF) announced today that it has reached a staff-level agreement with the Sri Lankan authorities on the Fourth Review of the country’s economic reform program under the Extended Fund Facility (EFF).
This milestone brings Sri Lanka a step closer to receiving approximately US$344 million in additional funding, pending approval by the IMF Executive Board.
The agreement follows a series of constructive discussions in Colombo and at the IMF and World Bank Spring Meetings in Washington, D.C. Evan Papageorgiou, IMF Mission Chief for Sri Lanka, emphasized that the staff-level agreement reflects continued strong performance under the EFF program.
“Sri Lanka’s ambitious reform agenda continues to deliver commendable outcomes,” Papageorgiou said. “The post-crisis growth rebound of 5 percent in 2024 is remarkable, and significant progress has been made in areas such as revenue mobilization, reserve accumulation, and structural reforms.”
Under the 48-month EFF arrangement, initially approved in March 2023 for a total of SDR 2.3 billion (around US$3 billion), Sri Lanka has already received SDR 1.016 billion (approximately US$1.378 billion). The current review, once approved, will bring the total disbursed to SDR 1.27 billion (roughly US$1.722 billion).
According to the IMF, most quantitative targets and structural benchmarks for the March–April period have been met, though the continuous benchmark on cost-recovery electricity pricing remains outstanding. Restoring such pricing is essential, the IMF noted, to mitigate fiscal risks and encourage investment in the energy sector.
The agreement remains subject to the implementation of key prior actions, including the re-establishment of electricity cost-recovery pricing and final confirmation of financing assurances from multilateral partners. Debt restructuring, a major element of the program, is reported to be nearly complete.
Despite the progress, the IMF warned of significant risks ahead, especially from global trade policy uncertainty. The Fund stressed the need for Sri Lanka to continue prudent fiscal management, including sustained revenue mobilization and targeted social safety nets to protect the most vulnerable.
“The government’s commitment to reform, fiscal discipline, and corruption reduction has bolstered confidence and policy continuity,” Papageorgiou said. “Maintaining this momentum is vital to preserve the gains made and ensure long-term macroeconomic stability and inclusive growth.”
The IMF team expressed appreciation to Sri Lankan authorities, including Deputy Finance Minister Dr. Harshana Suriyapperuma, Central Bank Governor Dr. P. Nandalal Weerasinghe, Treasury Secretary K M Mahinda Siriwardana, and other senior officials, for their cooperation and the quality of discussions.
The IMF Executive Board is expected to review the Fourth Review report in the coming weeks.
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