{"id":79298,"date":"2022-09-01T00:36:29","date_gmt":"2022-09-01T04:36:29","guid":{"rendered":"http:\/\/dbsjeyaraj.com\/dbsj\/?p=79298"},"modified":"2022-09-01T18:08:11","modified_gmt":"2022-09-01T22:08:11","slug":"79298","status":"publish","type":"post","link":"https:\/\/dbsjeyaraj.com\/dbsj\/?p=79298","title":{"rendered":"Sri Lanka Reaches Staff Level Agreement with the International Monetary Fund subject to the approval by IMF management and the Executive Board in the period ahead:IMF will Provide a new 48-month Extended Fund Facility (EFF) amounting to US$2.9 billion"},"content":{"rendered":"

An IMF mission led by Peter Breuer and Masahiro Nozaki visited Colombo from August 24 to September 1, 2022 to continue discussions on IMF support for Sri Lanka and the authorities\u2019 comprehensive economic reform program.<\/p>\n

At the end of the mission, Messrs. Breuer and Nozaki issued the following statement:<\/strong><\/p>\n

\u201cThe Sri Lankan authorities and the IMF team have reached a staff-level agreement to support the authorities\u2019 economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion)\u201d<\/p>\n

\u201cThe new EFF arrangement will support Sri Lanka\u2019s program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka\u2019s growth potential,\u201d the IMF said in a statement.<\/p>\n

\u201cThe agreement is subject to the approval by IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka\u2019s official creditors and making a good faith effort to reach a collaborative agreement with private creditors. Debt relief from Sri Lanka\u2019s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.\u201d<\/p>\n

<\/p>\n

\u201cSri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic. The April debt moratorium led to Sri Lanka defaulting on its external obligations, and a critically low level of foreign reserves has hampered the import of essential goods, including fuel, further impeding economic activity. The economy is expected to contract by 8.7 percent in 2022 and inflation recently exceeded 60 percent. The impact has been disproportionately borne by the poor and vulnerable.\u201d<\/p>\n

\u201cAgainst this backdrop, the authorities\u2019 program, supported by the Fund, would aim to stabilize the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promoting sustainable and inclusive growth.\u201d<\/p>\n

Key elements of the program are:<\/strong><\/p>\n


\nRaising <\/strong>fiscal revenue to support fiscal consolidation. Starting from one of the lowest revenue levels in the world, the program will implement major tax reforms. These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 percent of GDP by 2024.<\/p>\n

Introducing<\/strong> cost-recovery based pricing for fuel and electricity to minimize fiscal risks arising from state-owned enterprises. The team welcomed the authorities\u2019 already announced substantial revenue measures and energy pricing reforms;<\/p>\n

Mitigating<\/strong> the impact of the current crisis on the poor and vulnerable by raising social spending, and improving the coverage and targeting of social safety net programs;<\/p>\n

Restoring<\/strong> price stability through data-driven monetary policy action, fiscal consolidation, phasing out monetary financing, and stronger central bank autonomy that allows pursuing a flexible inflation targeting regime. A new Central Bank Act is a cornerstone of this strategy;<\/p>\n


\nRebuilding<\/strong> foreign reserves through restoring a market-determined and flexible exchange rate, supported by the comprehensive policy package under the program;<\/p>\n


\nSafeguarding<\/strong> financial stability by ensuring a healthy and adequately capitalized banking system, and by upgrading financial sector safety nets and regulatory standards with a revised Banking Act; and<\/p>\n


\nReducing <\/strong>corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, and conducting an in-depth governance diagnostic, supported by IMF technical assistance.<\/p>\n

\u201cThe IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury K M Mahinda Siriwardana, and other senior government and CBSL officials. It also met with Parliamentarians, representatives from the private sector, civil society organizations and development partners.<\/p>\n

\u201cWe would like to thank the authorities for their candid approach and warm hospitality and are looking forward to continuing our engagement in support of Sri Lanka and its people.\u201d<\/p>\n


\nCourtesy:NewsIn.ASia<\/em><\/p>\n

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An IMF mission led by Peter Breuer and Masahiro Nozaki visited Colombo from August 24 to September 1, 2022 to continue discussions on IMF support for Sri Lanka and the authorities\u2019 comprehensive economic reform program. At the end of the mission, Messrs. Breuer and Nozaki issued the following statement: \u201cThe Sri Lankan authorities and the …<\/p>\n

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