IMF board to meet on Friday to approve 4th tranche for Sri Lanka

 By Bandula Sirimanna 

The International Monetary Fund’s executive board is to meet on Friday February 28 to unlock US $ 333 million, the fourth tranche of $2.9 billion bailout package to Sri Lanka granted under Extended Facility (EFF) programme supported by monetary agency.    

The staff-level agreement reached in November 23, 2024, will be presented for Executive Board approval, which is contingent upon, among other things, implementation by the authorities of prior actions, including submission of the 2025 budget that is consistent with parameters identified under the programme, IMF Spokesperson Julie Kozack said.

The 2025 budget signals a strong commitment to adhering to the IMF supported programme with a focus on achieving a primary budget surplus and introducing new revenue measures to offset shortfalls resulting from tax policy changes, Finance Ministry sources said.

However the IMF Executive Board will focus on the government authority’s ability to debt sustainability, revenue base enhancement and social constraints,  

It will also consider the implementation by the authorities of prior actions; and the completion of financing assurances review, confirming multilateral partners’ financing contributions and assessing adequate progress with debt restructuring

The new government’s mandate will reinvigorate governance reforms addressing corruption risks, rebuilding economic confidence, and making growth more robust and inclusive, IMF sources revealed.

Maintaining macroeconomic stability and restoring debt sustainability are key to securing Sri Lanka’s prosperity and require persevering with responsible fiscal policy.

Continued revenue mobilisation efforts and spending restraint are needed to prepare the 2025 budget in line with IMF supported EFF programme parameters.

Revenue administration reforms and efforts to improve tax compliance will help to ensure that the burden stemming from the crisis is shared proportionately to taxpayers’ ability to contribute.

Avoiding new tax exemptions will help reduce fiscal revenue leakages, corruption risks and build much needed fiscal buffers, including for social spending and to support Sri Lanka’s most vulnerable.

Maintaining cost recovery in fuel and electricity pricing and resolving legacy debts will help minimise fiscal risks arising from state-owned enterprises.