IMF, Sri Lanka strike staff-level pact on funding of $345 million

According to Business Recorder, the International Monetary Fund and Sri Lanka have arrived at a staff-level understanding on the seventh review of the Extended Fund Facility, a step that would unlock around $345 million in financing. The IMF announced the pact in a statement issued on Sunday. The understanding still needs sign-off from the Fund's executive board before funds can flow.

Sri Lanka is climbing out of the 2022 economic crisis, which was set off by a severe lack of dollars, and it is backed by a $2.9-billion programme. The deal also depends on the 2027 budget, due to be presented in parliament next month, and on finishing a check of financing assurances. That check will verify what multilateral partners contribute and whether debt restructuring is sufficient.

Once the review concludes, Sri Lanka will gain access to special drawing rights worth about $345 million, lifting total disbursed funds to $2.7 billion. Earlier, in May, the IMF had projected 3% growth for the island this year when it approved a $700-million double tranche to bolster reserves. The Fund noted that Sri Lanka imports all of its fuel and cited risks from the Middle East war, global trade and the El Niño weather pattern, urging the government to let domestic fuel prices follow international rates while shielding vulnerable households.