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The IMF reached a staff-level agreement with Sri Lankan authorities on the third review of the four-year Extended Fund Facility (EFF), enabling access to a US$333 million tranche, pending approval from IMF management and the Executive Board. The agreement is contingent on submitting a 2025 budget aligned with program goals and progressing on debt restructuring. Sri Lanka's reform agenda under the EFF has yielded positive results, including 4% economic growth, low inflation, strengthened public finances, and increased reserves. While most program targets were met, social spending fell short, requiring improved targeting of safety nets like Aswesuma. Sustaining reforms, enhancing governance, and ensuring debt sustainability remain critical, supported by fiscal responsibility, revenue mobilization, and addressing state-owned enterprise risks. The IMF highlighted the importance of inclusive growth and macroeconomic stability while commending Sri Lanka’s recent debt agreements and commitment to reforms.
