IMF to delay $330 mln second tranche of EFF

The International Monetary Fund (IMF)’s disbursement of the second tranche amounting to around US$330 million of the total loan of $2.9 billion will be delayed till the approval of the executive board following the staff level agreement with the Sri Lankan authorities, IMF senior mission chief Peter Breuer said.

Answering a question raised by a journalist at the media briefing on Wednesday, he said Sri Lanka is yet to fulfill some of the important commitments under the reform programme and it will take some time for the authorities to achieve it.

The Executive Board approval of the first programme review requires the completion of financing assurances reviews.

These financing assurances reviews will focus on whether adequate progress has been made with debt restructuring to give confidence that it will be concluded in a timely manner and in line with the programme’s debt targets, he pointed out.

“Discussions are on-going, and the authorities are continuing to make progress on their plans for revenue mobilization targets, anti-corruption efforts, and other important structural reforms,” he added.

He noted that there was no fixed timeframe on the disbursement of the second tranche as it needs the approval of the executive board.

The Sri Lanka’s government revenue is set to decline by 15 per cent from the target agreed with the IMF, he said adding that this may be due to weak revenue collection due to poor tax administration.

This could weaken the government’s ability to provide essential public services; and undermine the path to debt sustainability, he said adding that it is important to strengthen tax administration, remove tax exemptions, and actively eliminate tax evasion to increase revenues and signal better governance.