{
  "title": "IMF Executive Board Completes the Third Review Under the Extended Fund Facility Arrangement with Sri Lanka",
  "publication": "IMF News, February 28, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/02/28/pr25053-sri-lanka-imf-completes-the-3rd-rev-under-the-eff",
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  "summary": "The IMF Executive Board completed the Third Review under the 48-month Extended Fund Facility with Sri Lanka, providing the country with immediate access to SDR 254 million (about US $334 million) to support its economic policies and reforms.",
  "publishDate": "2025-02-28",
  "sections": [
    {
      "heading": "Third Review Outcome and Financing",
      "content": "- The Executive Board completed the Third Review under the 48-month Extended Fund Facility (EFF) Arrangement.\n- Immediate access to SDR 254 million (about US $334 million) was provided to Sri Lanka.\n- This disbursement brings total IMF financial support disbursed so far to SDR 1.02 billion (about US$1.34 billion).\n- The EFF arrangement was approved on March 20, 2023, in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion)."
    },
    {
      "heading": "Program Performance and Reform Milestones",
      "content": "- Performance under the program has been strong: all quantitative targets for end-December 2024 were met, except the indicative target on social spending.\n- Most structural benchmarks due by end-January 2025 were either met or implemented with delay.\n- The recent successful completion of the bond exchange is identified as a major milestone towards restoring debt sustainability.\n- Statement highlights:\n  - Reforms are bearing fruit; recovery has been remarkable.\n  - Inflation remains low, revenue collection is improving, and reserves continue to accumulate.\n  - By end-2024, Sri Lanka’s real GDP is estimated to have recovered 40 percent of its loss incurred between 2018 and 2023.\n  - Economic growth averaged 4.3 percent since growth resumed in the third quarter of 2023.\n  - Recovery is expected to continue in 2025."
    },
    {
      "heading": "Policy Recommendations and Priorities (as stated)",
      "content": "- Sustain the reform momentum to ensure macroeconomic stability and debt sustainability, and promote long-term inclusive growth.\n- Sustain revenue mobilization to restore fiscal sustainability:\n  - Boost tax compliance.\n  - Refrain from tax exemptions.\n- Meet social spending targets and continue reforms of the social safety net to ease economic hardship and promote inclusive growth with limited fiscal space.\n- Restore cost-recovery electricity pricing without delay to contain fiscal risks from state-owned enterprises.\n- Execute capital spending more smoothly within the fiscal envelope to foster medium-term growth.\n- Finalize bilateral agreements with creditors in the Official Creditor Committee and with remaining creditors following the bond exchange.\n- Monetary policy should:\n  - Prioritize maintaining price stability.\n  - Sustain commitment to prohibit monetary financing and safeguard Central Bank independence.\n  - Maintain exchange rate flexibility and gradually phase out balance of payments measures to rebuild external buffers.\n- Resolve non-performing loans, strengthen governance and oversight of state-owned banks, and improve insolvency and resolution frameworks to revive credit growth.\n- Address prolonged structural challenges, including steadfast implementation of governance reforms, to unlock long-term potential."
    },
    {
      "heading": "Economic Outlook and Key Projections (selected indicators)",
      "content": "- Real GDP growth:\n  - 2022: -7.3\n  - 2023: -2.3\n  - 2024: 4.5\n  - 2025: 3.0\n  - 2026: 3.1\n- Inflation (average, Colombo CPI):\n  - 2022: 45.2\n  - 2023: 17.4\n  - 2024: 1.2\n  - 2025: 3.8\n  - 2026: 5.4\n  - 2027: 5.2\n  - 2028: 5.0\n- GDP deflator growth:\n  - 2022: 47.5\n  - 2023: 17.5\n  - 2024: 3.5\n  - 2025: 4.9\n  - 2026: 5.5\n  - 2027: 5.3\n  - 2028: 5.1\n- Nominal GDP growth:\n  - 2022: 36.6\n  - 2023: 14.8\n  - 2024: 8.2\n  - 2025: 8.1\n  - 2026: 8.7\n  - 2027: 8.5\n  - 2028: 8.4\n  - 2029: 8.3\n- Public finance (percent of GDP):\n  - Revenue and grants: 2022: 11.1; 2023: 13.7; 2024: 15.1; 2025: 15.3; 2026: 15.2\n  - Expenditure: 2022: 18.6; 2023: 19.4; 2024: 19.3; 2025: 20.4; 2026: 19.8; 2027: 19.2; 2028: 19.1; 2029: 19.0; 2030: 18.8\n  - Primary balance: 2022: -3.7; 2023: 0.6; 2024: 2.2; 2025: 2.3\n  - Central government balance: 2022: -10.2; 2023: -8.3; 2024: -5.6; 2025: -5.4; 2026: -4.6; 2027: -4.0; 2028: -3.8; 2029: -3.5\n  - Central government gross financing needs: 2022: 34.1; 2023: 22.1; 2024: 22.8; 2025: 19.7; 2026: 15.7; 2027: 13.2; 2028: 11.8; 2029: 11.6\n  - Central government debt: 2022: 115.9; 2023: 109.5; 2024: 99.5; 2025: 105.7; 2026: 106.4; 2027: 103.5; 2028: 100.2; 2029: 97.0; 2030: 93.9\n  - Public debt 2/: 2022: 126.3; 2023: 115.8; 2024: 104.6; 2025: 110.7; 2026: 110.9; 2027: 107.4; 2028: 103.7; 2029: 100.1; 2030: 96.8\n- Money and credit (percent change, end of period):\n  - Reserve money: 2022: 3.3; 2023: 10.3; 2024: 9.7\n  - Broad money: 2022: 15.5; 2023: 7.3; 2024: 10.0\n  - Domestic credit: 2022: -1.2; 2023: 6.1; 2024: 2.8; 2025: 4.0; 2026: 4.3\n  - Credit to private sector: 2022: 6.4; 2023: 7.9; 2024: 7.5; 2025: 9.5; 2026: 9.4\n  - Credit to private sector (adjusted for inflation): 2022: -38.8; 2023: -18.2; 2024: 6.6; 2025: 4.1\n- Balance of Payments (in millions of U.S. dollars):\n  - Exports: 2022: 13,107; 2023: 11,911; 2024: 12,772; 2025: 13,446; 2026: 14,090; 2027: 14,795; 2028: 15,638; 2029: 16,397; 2030: 17,192\n  - Imports: 2022: -18,291; 2023: -16,811; 2024: -18,841; 2025: -21,718; 2026: -22,668; 2027: -23,410; 2028: -24,105; 2029: -25,109; 2030: -26,026\n  - Current account balance: 2022: -737; 2023: 2,582; 2024: 1,824; 2025: -409; 2026: -538; 2027: -751; 2028: -864; 2029: -952; 2030: -922\n  - Current account balance (in percent of GDP): 2022: 4.2; 2023: 1.7; 2024: 1.6; 2025: 1.5; 2026: 1.3\n- Gross official reserves (end of period, in millions of U.S. dollars):\n  - 2022: 1,898; 2023: 4,392; 2024: 6,122; 2025: 7,056; 2026: 9,303; 2027: 13,118; 2028: 14,710; 2029: 14,875; 2030: 15,175\n  - In months of prospective imports of goods & services: 2022: 2.4; 2023: 2.9; 2024: 5.9\n  - In percent of ARA composite metric: 2022: 16.6; 2023: 37.5; 2024: 50.3; 2025: 58.3; 2026: 75.4; 2027: 108.8; 2028: 108.5; 2029: 108.7\n  - Usable Gross official reserves (end of period) 3/: 2022: 462; 2023: 2,956; 2024: 4,686; 2025: 25.3; 2026: 38.5\n- External debt (public and private, in billions of U.S. dollars):\n  - 2022: 57.4; 2023: 54.1; 2024: 53.9; 2025: 54.9; 2026: 57.2; 2027: 61.2; 2028: 62.9; 2029: 63.3; 2030: 65.6\n  - As a percent of GDP: 2022: 77.0; 2023: 64.1; 2024: 54.4; 2025: 56.1; 2026: 65.9; 2027: 64.0; 2028: 60.4; 2029: 58.9\n- Memorandum items:\n  - Nominal GDP (in billions of rupees): 2022: 24,064; 2023: 27,630; 2024: 29,893; 2025: 32,309; 2026: 35,123; 2027: 38,113; 2028: 41,343; 2029: 44,819; 2030: 48,551\n  - Exchange Rate (period average): 2022: 322.6; 2023: 327.5; 2024: 302.0\n  - Exchange Rate (end of period): 2022: 363.1; 2023: 323.9; 2024: 293.0\n\nSource: IMF Executive Board press release, February 28, 2025.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Sri Lanka and the IMF\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- Press Release\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/02/28/pr25053-sri-lanka-imf-completes-the-3rd-rev-under-the-eff"
    }
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    "Published: February 28, 2025",
    "The Executive Board completed the Third Review under the 48-month Extended Fund Facility (EFF) Arrangement.",
    "Immediate access to SDR 254 million (about US $334 million) was provided to Sri Lanka.",
    "This disbursement brings total IMF financial support disbursed so far to SDR 1.02 billion (about US$1.34 billion).",
    "The EFF arrangement was approved on March 20, 2023, in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion).",
    "Performance under the program has been strong: all quantitative targets for end-December 2024 were met, except the indicative target on social spending.",
    "Most structural benchmarks due by end-January 2025 were either met or implemented with delay.",
    "The recent successful completion of the bond exchange is identified as a major milestone towards restoring debt sustainability.",
    "Statement highlights:",
    "Sustain the reform momentum to ensure macroeconomic stability and debt sustainability, and promote long-term inclusive growth.",
    "Sustain revenue mobilization to restore fiscal sustainability:",
    "Meet social spending targets and continue reforms of the social safety net to ease economic hardship and promote inclusive growth with limited fiscal space.",
    "Restore cost-recovery electricity pricing without delay to contain fiscal risks from state-owned enterprises.",
    "Execute capital spending more smoothly within the fiscal envelope to foster medium-term growth.",
    "Finalize bilateral agreements with creditors in the Official Creditor Committee and with remaining creditors following the bond exchange.",
    "Monetary policy should:",
    "Resolve non-performing loans, strengthen governance and oversight of state-owned banks, and improve insolvency and resolution frameworks to revive credit growth.",
    "Address prolonged structural challenges, including steadfast implementation of governance reforms, to unlock long-term potential.",
    "Real GDP growth:",
    "Inflation (average, Colombo CPI):",
    "GDP deflator growth:",
    "Nominal GDP growth:",
    "Public finance (percent of GDP):",
    "Money and credit (percent change, end of period):",
    "Balance of Payments (in millions of U.S. dollars):",
    "Gross official reserves (end of period, in millions of U.S. dollars):",
    "External debt (public and private, in billions of U.S. dollars):",
    "Memorandum items:",
    "[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)",
    "[Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Press Release](https://www.imf.org/en/News/Articles/2023/03/20/pr2379-imf-executive-board-approves-under-the-new-eff-arrangement-for-sri-lanka)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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