IMF Executive Board Completes the First Review Under the Extended Fund Facility Arrangement with Sri Lanka
IMF News, December 12, 2023
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Bibliographic details
- Published: December 12, 2023
Review outcome and financing
- The Executive Board completed the first review under the 48-month Extended Fund Facility (EFF) Arrangement.
- Immediate disbursement: SDR 254 million (about US$337 million).
- Total IMF financial support disbursed so far: SDR 508 million (about US$670 million).
- Total EFF Arrangement amount at program approval (March 20, 2023): SDR 2.286 billion (about US$3 billion).
IMF assessment of program performance
- Overall program performance: satisfactory.
- Quantitative performance criteria at end-June: all met except the one on expenditure arrears.
- Indicative targets at end-June: all met except the one on tax revenues.
- Structural benchmarks due by end-October 2023: most either met or implemented with delay.
- Governance milestone: publication of the Governance Diagnostic Report — the first in Asia and a structural benchmark under the program.
Progress on macroeconomic objectives and debt treatment
- Commendable progress noted on:
- Restoring debt sustainability.
- Raising revenue.
- Rebuilding reserve buffers.
- Reducing inflation.
- Safeguarding financial stability.
- Debt treatment developments:
- Agreements-in-principle with the Official Creditors Committee and Export-Import Bank of China on debt treatments are consistent with EFF targets.
- Swift completion and signature of Memoranda of Understanding with official creditors are important.
- Timely implementation of agreements and reaching comparable terms with external private creditors should help restore debt sustainability over the medium term.
Policy priorities and recommendations
- Sustaining reform momentum and strong ownership of reforms is paramount.
- Key priorities listed by the IMF:
- Advancing revenue mobilization.
- Aligning energy pricing with costs.
- Strengthening social safety nets and protecting social spending.
- Rebuilding external buffers.
- Safeguarding financial stability.
- Eradicating corruption and enhancing governance.
- Reinforcing revenue-based fiscal consolidation supported by revenue administration reforms.
- Central Bank focus: continue the multi-pronged disinflation strategy and accumulate reserves, supported by exchange rate flexibility.
- Financial sector: implement the bank recapitalization plan and strengthen financial supervision and crisis management framework.
Selected economic indicators and projections (highlights)
- Real GDP growth:
- 2020: -4.6
- 2021: 3.5
- 2022: -7.8
- 2023 (Est.): -3.6
- 2024 (Projections): 1.8
- 2025: 2.7
- 2026: 3.0
- 2027: 3.1
- 2028: (no figure provided)
- Inflation (average, Colombo CPI):
- 2020: 4.6
- 2021: 6.0
- 2022: 45.2
- 2023 (Est.): 17.9
- 2024 (Projections): 7.9
- 2025: 5.6
- 2026: 5.4
- 2027: 5.3
- 2028: 5.2
- Public finance (in percent of GDP) — selected:
- Revenue and grants:
- 2020: 8.8
- 2021: 8.3
- 2022: 10.2
- 2023: 13.0
- 2024: 15.0
- 2025: 15.1
- 2026: 15.2
- Expenditure:
- 2020: 21.0
- 2021: 20.0
- 2022: 18.5
- 2023: 19.0
- 2024: 20.3
- 2025: 19.7
- 2026: 19.3
- Central government balance:
- 2020: -12.2
- 2021: -11.7
- 2022: -10.2
- 2023: -8.8
- 2024: -4.2
- 2025: -3.9
- Central government debt (in percent of GDP):
- 2020: 96.7
- 2021: 102.7
- 2022: 115.5
- 2023: 107.8
- 2024: 110.3
- 2025: 111.4
- 2026: 110.8
- 2027: 108.0
- 2028: 104.6
- Public debt 2/ (in percent of GDP):
- 2020: 105.1
- 2021: 114.9
- 2022: 125.8
- 2023: 114.1
- 2024: 115.9
- 2025: 116.3
- 2026: 115.1
- 2027: 111.7
- 2028: 107.9
- Gross official reserves (end of period, in millions of U.S. dollars):
- 2020: 5,664
- 2021: 3,139
- 2022: 1,898
- 2023: 3,806
- 2024 (Proj.): 5,346
- 2025: 7,477
- 2026: 9,894
- 2027: 13,525
- 2028: 15,320
- Gross official reserves (In percent of ARA composite metric):
- 2020: 46.0
- 2021: 24.7
- 2022: 16.4
- 2023: 33.2
- 2024: 44.7
- 2025: 59.9
- 2026: 77.1
- 2027: 99.7
- 2028: 109.6
- Usable Gross official reserves (end of period) 3/:
- 2020: 1,565
- 2021: 462
- 2022: 2,371
- 2023: 3,910
- Subsequent row shows: 1.0; 20.7; 32.7 (as provided)
- External debt (public and private, in billions of U.S. dollars):
- 2020: 53.4
- 2021: 58.4
- 2022: 57.4
- 2023: 53.8
- 2024: 55.5
- 2025: 57.7
- 2026: 63.4
- 2027: 65.1
- External debt (as a percent of GDP):
- 2020: 63.2
- 2021: 65.9
- 2022: 76.7
- 2023: 64.7
- 2024: 68.0
- 2025: 70.4
- 2026: 71.8
- 2027: 72.7
- 2028: 70.3
- Balance of payments (in millions of U.S. dollars) — selected:
- Exports:
- 2020: 10,048
- 2021: 12,499
- 2022: 13,106
- 2023: 12,365
- 2024: 13,555
- 2025: 14,377
- 2026: 15,111
- 2027: 15,846
- 2028: 16,651
- Imports:
- 2020: -16,055
- 2021: -20,638
- 2022: -18,291
- 2023: -17,887
- 2024: -20,718
- 2025: -23,002
- 2026: -24,322
- 2027: -25,144
- 2028: -26,049
- Current account balance:
- 2020: -1,187
- 2021: -3,285
- 2022: -744
- 2023: 1,232
- 2024: -634
- 2025: -908
- 2026: -879
- 2027: -846
- 2028: -764
- Current account balance (in percent of GDP) — series includes values such as:
- 2020: 0.5
- 2021: -2.1
- 2022: 0.1
- 2023: 2.9
- 2024: 1.2
- 2025: 0.9
- 2026: 1.1
- 2027: 1.3
- 2028: (no figure provided)
Risks and implementation emphasis
- Timely completion of creditor agreements and comparable treatment from external private creditors are critical risks/conditions for restoring debt sustainability.
- Continued timely implementation of structural and governance reforms is emphasized to deliver tangible economic gains to citizens.
- Protecting the poor and vulnerable via strengthened social safety nets remains a priority while pursuing fiscal consolidation.
Source: IMF Press Release No. 23/439 — "IMF Executive Board Completes the First Review Under the Extended Fund Facility Arrangement with Sri Lanka", December 12, 2023.
Content in this bundle
- Press Release-English
- pr23439-tamil-sri-lanka