Governor of the Central Bank of Sri Lanka (CBSL) Nandalal Weerasinghe speaks at a press conference in Colombo, Sri Lanka on March 3, 2023.(Photo by Gayan Sameera/Xinhua)
"It is now important for the Sri Lankan authorities and creditors to closely coordinate and make swift progress toward a debt treatment that restores debt sustainability under the EFF-supported program," IMF senior mission chief for Sri Lank Peter Breuer said.
COLOMBO, March 22 (Xinhua) -- Sri Lanka will receive the first tranche of the IMF Extended Fund Facility (EFF) within the next two days, IMF senior mission chief for Sri Lank Peter Breuer said on Tuesday.
Sri Lanka will immediately receive an initial disbursement of about 330 million U.S. dollars from the EFF arrangement, which is expected to catalyze new external financing including from the Asian Development Bank and the World Bank, he told a press conference.
Breuer said the reform program supported under the EFF arrangement is built on strong policy measures and prioritizes, including an ambitious revenue-based fiscal consolidation, restoration of public debt sustainability, policies to safeguard financial stability, and structural reforms to enhance growth.
Sri Lanka has already started implementing these challenging policy actions and it is now essential to continue the reform momentum under strong ownership by the authorities and the Sri Lankans more broadly, he said.
He said the economic impact of the reforms on the poor and vulnerable needs to be mitigated with appropriate measures and in this regard, they welcome the authorities' firm commitment to strengthen social safety nets, including through a minimum spending floor, well-targeted spending through a new Social Registry, and establishment of objective eligibility criteria.
People carry goods at a market in Colombo, Sri Lanka on March 10, 2023. (Photo by Gayan Sameera/Xinhua)
Tax reforms under the program are designed to be progressive to ensure greater contributions from high-income earners, and efforts to increase tax revenues should be pursued in a growth-friendly manner while protecting the poor and most vulnerable.
"The IMF Board approval of assistance to Sri Lanka required assurances from official bilateral creditors that they will provide debt relief and/or financing to restore debt sustainability consistent with the program, as well as an assessment that the authorities are making good faith efforts to reach a collaborative agreement with private creditors," he said.
"It is now important for the Sri Lankan authorities and creditors to closely coordinate and make swift progress toward a debt treatment that restores debt sustainability under the EFF-supported program," he said.
Sri Lankan President Ranil Wickremesinghe expressed his gratitude for the support of the IMF and other international partners.
The IMF EFF arrangement will enable Sri Lanka to access up to 7 billion dollars in funding, he said.
The president is committed to full transparency in all discussions with financial institutions and creditors to achieve sustainable levels of debt through prudent fiscal management and an ambitious reform agenda.
Sri Lanka started negotiations with the IMF in 2022 after the South Asian country was hit by a severe economic crisis.■