The International Monetary Fund (IMF) and the Sri Lankan authorities have reached a staff-level agreement on the Fourth Review of Sri Lanka’s reform program supported under the IMF’s 48-month Extended Fund Facility (EFF). Once the agreement is approved by the IMF Executive Board, Sri Lanka will gain access to approximately US$344 million in financial assistance.
According to the IMF, the country’s overall program performance remains strong, with notable progress in economic growth, revenue mobilization, reserve accumulation, and structural reforms. The IMF also noted that Sri Lanka’s debt restructuring is nearly complete and that the government has shown continued commitment to reform objectives.
The agreement follows constructive discussions held in Colombo and during the IMF-World Bank Spring Meetings in Washington DC. IMF Mission Chief for Sri Lanka, Evan Papageorgiou, confirmed the staff-level agreement, noting that it is subject to Executive Board approval. This approval hinges on the implementation of specific prior actions—namely, the restoration of cost-recovery electricity pricing and assurance of financing contributions from multilateral partners, alongside sufficient progress in debt restructuring.
Upon completion of the review, Sri Lanka will receive SDR254 million (approximately US$344 million), raising the total disbursed support under the arrangement to SDR1.27 billion (roughly US$1.72 billion).
The IMF highlighted Sri Lanka’s significant achievements under its reform program, including a projected post-crisis growth rebound of 5% in 2024, an increase in the revenue-to-GDP ratio from 8.2% in 2022 to 13.5% in 2024, and gross official reserves reaching US$6.5 billion by end-March 2025. However, the IMF expressed concern that the structural benchmark on cost-recovery electricity pricing remains unmet.
“Continued fiscal prudence, revenue mobilization, and reserve accumulation are essential to safeguard Sri Lanka’s economic recovery amid ongoing global uncertainty,” the statement said, adding that improving tax compliance, enhancing social safety nets, and maintaining inflationary control are vital to long-term stability.
The IMF also urged the government to maintain momentum in governance reforms, particularly in reducing corruption vulnerabilities, to secure the gains achieved and ensure inclusive and sustainable economic growth.
The IMF team held discussions with Deputy Minister of Finance Dr. Harshana Suriyapperuma, Central Bank Governor Dr. P. Nandalal Weerasinghe, Treasury Secretary Mr. K. M. Mahinda Siriwardana, and other senior officials. The team expressed appreciation for the authorities’ strong collaboration and commitment to the reform agenda.
