Sri Lanka completes IMF Extended Fund Facility amid review delays

Sri Lanka has successfully completed the International Monetary Fund’s (IMF) 17th Extended Fund Facility (EFF), marking the first time a previous IMF agreement with the country has been fully completed. While the JVP/NPP government had previously campaigned on abandoning IMF agreements, it maintained a pragmatic approach by continuing the arrangement established in 2022.

Debate continues regarding whether the government should enter a new arrangement with the IMF. Supporters, including opposition leader Sajith Premadasa, argue a fresh agreement would bolster international confidence and ensure economic stability. Critics express concern that such deals impose austerity measures and limit policy freedom.

Concurrently, the IMF has signaled a delay in concluding the seventh review of Sri Lanka’s ongoing economic recovery programme. Dr. Martha Tesfaye Woldemichael, the IMF’s Resident Representative for Sri Lanka, stated that further consultations are required before the review can be formally completed. The review is a vital milestone for the continued disbursement of funds necessary to rebuild foreign reserves and maintain macroeconomic stability.