{
  "title": "IMF Executive Board Concludes 2018 Article IV Consultation and Completes Fourth Review under the Extended Arrangement Under the Extended Fund Facility with Sri Lanka, Approving US$ 252 Million Disbursement",
  "publication": "IMF News, June 1, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/06/01/pr18212-sri-lanka-imf-executive-board-concludes-2018-article-iv-consultation",
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  "summary": "Executive Board completed the fourth review of Sri Lanka’s economic performance under the three-year Extended Arrangement under the Extended Fund Facility (EFF) on June 1, 2018.",
  "publishDate": "2018-06-01",
  "sections": [
    {
      "heading": "Review outcome and disbursements",
      "content": "- Executive Board completed the fourth review of Sri Lanka’s economic performance under the three-year Extended Arrangement under the Extended Fund Facility (EFF) on June 1, 2018.\n- Completion of the review enables the disbursement of the equivalent of SDR 177.774 million (about US$ 252 million).\n- Total disbursements under the arrangement to date amount to the equivalent of SDR 715.23 million (about US$ 1,014 million).\n- Sri Lanka’s three-year extended arrangement was approved on June 3, 2016, in the amount of about SDR 1.1 billion (about US$1.5 billion, or 185 percent of quota)."
    },
    {
      "heading": "Major achievements cited",
      "content": "- Launch of the new Inland Revenue Act.\n- Important steps in energy-pricing reforms.\n- Progress towards flexible inflation targeting.\n- Approval of an automatic fuel pricing formula described as a major achievement toward reducing fiscal risks from state-owned enterprises (SOEs)."
    },
    {
      "heading": "IMF assessment (Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director)",
      "content": "- “Sri Lanka has made important progress under its Fund-supported program. The authorities’ efforts to improve the policy mix through fiscal consolidation, prudent monetary policy, and landmark structural reforms are supporting the economic recovery, despite recent shocks.”\n- Continued reform momentum is critical given:\n  - “the still sizable public debt and low external buffers,” and\n  - the need “to set the foundation for strong and inclusive growth.”"
    },
    {
      "heading": "Policy priorities and recommendations",
      "content": "- Fiscal policy\n  - Further progress with revenue-based fiscal consolidation, supported by the new Inland Revenue Act, is needed to help safeguard important social and infrastructure spending, including in response to natural disasters.\n  - Adopt a robust fiscal rule and medium-term debt management strategy to help place debt firmly on a downward path.\n- State-owned enterprises (SOEs)\n  - Implement the recently approved automatic fuel pricing formula.\n  - Implement an automatic pricing formula for electricity.\n  - Carry out a restructuring plan for Sri Lankan Airlines.\n  - Further strengthen SOE governance and transparency.\n  - Mitigate impacts on the vulnerable by strengthening social safety nets.\n- Monetary policy and external resilience\n  - The Central Bank of Sri Lanka should continue to manage monetary policy prudently in the face of price shocks and market volatility.\n  - Sustain efforts to build up international reserves, with exchange rate flexibility as the first line of defense in response to volatile global capital flows.\n  - Upgrade the central bank law to be instrumental for the new inflation targeting framework.\n  - Monitor closely continued credit growth in the real estate sector despite stable financial soundness indicators.\n- Structural reforms and inclusiveness\n  - Step up implementation of structural reforms with a focus on:\n    - Fostering gradual trade liberalization and the investment climate.\n    - Developing a natural disaster risk financing framework.\n    - Promoting gender equality in the labor market together with well-targeted social safety nets."
    },
    {
      "heading": "Procedural note",
      "content": "- The Executive Board also concluded the 2018 Article IV consultation with Sri Lanka on June 1, 2018; a separate press release will be issued shortly.\n\nPress Release No. 18/212 — June 1, 2018 — IMF Communications Department\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- PRESS CENTER\n- Press Release No. 16/262\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/06/01/pr18212-sri-lanka-imf-executive-board-concludes-2018-article-iv-consultation"
    }
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    "Published: June 1, 2018",
    "Executive Board completed the fourth review of Sri Lanka’s economic performance under the three-year Extended Arrangement under the Extended Fund Facility (EFF) on June 1, 2018.",
    "Completion of the review enables the disbursement of the equivalent of SDR 177.774 million (about US$ 252 million).",
    "Total disbursements under the arrangement to date amount to the equivalent of SDR 715.23 million (about US$ 1,014 million).",
    "Sri Lanka’s three-year extended arrangement was approved on June 3, 2016, in the amount of about SDR 1.1 billion (about US$1.5 billion, or 185 percent of quota).",
    "Launch of the new Inland Revenue Act.",
    "Important steps in energy-pricing reforms.",
    "Progress towards flexible inflation targeting.",
    "Approval of an automatic fuel pricing formula described as a major achievement toward reducing fiscal risks from state-owned enterprises (SOEs).",
    "“Sri Lanka has made important progress under its Fund-supported program. The authorities’ efforts to improve the policy mix through fiscal consolidation, prudent monetary policy, and landmark structural reforms are supporting the economic recovery, despite recent shocks.”",
    "Continued reform momentum is critical given:",
    "Fiscal policy",
    "State-owned enterprises (SOEs)",
    "Monetary policy and external resilience",
    "Structural reforms and inclusiveness",
    "The Executive Board also concluded the 2018 Article IV consultation with Sri Lanka on June 1, 2018; a separate press release will be issued shortly.",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Press Release No. 16/262](http://www.imf.org/en/News/Articles/2015/09/14/01/49/pr16262)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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