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Thursday, October 6, 2022

IMF deal a testimony of government’s commitment to carry out necessary reforms – President

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Reacting to Sri Lanka’s staff-level agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion, President Ranil Wickremesinghe said the agreement is a testimony of the government’s commitment to carry out the necessary reforms to offer a better life to Sri Lankan citizens.

He said it paves the way for the provision of financial support from the IMF and other development partners that should help the country to address current external imbalances and to restart Sri Lanka’s growth engine.

“I am grateful to the IMF team, the Ministry of Finance and the Central Bank of Sri Lanka for the hard work and dedication shown to come to that agreement in record time,” he said.

The authorities of the Democratic Socialist Republic of Sri Lanka announced today that they have reached Staff-Level Agreement with the IMF on a four-year program to be supported by an arrangement under the Extended Fund Facility (EFF) in the amount of about US$ 2.9 billion.

The announcement was made at the end of the mission conducted from August 24 in Colombo, where the IMF staff team for Sri Lanka held numerous meetings with the Ministry of Finance and the Central Bank of Sri Lanka to agree a package of reforms aimed at restoring macroeconomic stability and public finance sustainability in the country.

Upon the announcement, Ranil Wickremesinghe, the President of Sri Lanka and Minister of Finance, issued the following statement: “This agreement is a testimony of our commitment to carry out the necessary reforms to offer a better life to our fellow citizens. It paves the way for the provision of financial support from the IMF and other development partners that should help us to address current external imbalances and to restart our growth engine. I am grateful to the IMF team, the Ministry of Finance and the Central Bank of Sri Lanka for the hard work and dedication shown to come to that agreement in record time”.

The agreed economic reform package is designed to address comprehensively the challenges currently faced by Sri Lanka. The Program’s objectives are (i) to restore public finance sustainability through fiscal adjustment and debt restructuring, while protecting the most vulnerable and preserving financial stability, (ii) to bring back price stability and build external buffers, and (iii) to unlock the country’s growth potential through structural reforms and improvement in governance.

Reaching Staff Level Agreement with the IMF was one of the immediate objectives of the Government and a directive by the President since he was elected last month, the Finance Minister said in a statement.

The Sri Lankan government will now work on implementing the prior actions agreed under the Staff Level Agreement and on securing the financing assurances needed from Sri Lanka’s official bilateral creditors in order to obtain adoption of the Program by the IMF Executive Board, it said.

Sri Lankan authorities have been working with their international financial and legal advisors on their debt restructuring strategy. The authorities further intend to make a presentation to creditors in the next few weeks to update them on the most recent macroeconomic developments in the country, the main areas of the reform package agreed with the IMF staff and the next steps of the debt restructuring process, the statement added.

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