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

Oct 4 : The International Monetary Fund said it reached a staff-level agreement with Sri Lanka on the seventh review under its Extended Fund Facility to unlock financing of about $345 million.

• The island nation, backed by a $2.9-billion programme, is clawing its way out of a 2022 economic ​upheaval triggered by a severe shortage of dollars

• The staff-level deal needs approval from the IMF executive board and hinges on the 2027 budget to be unveiled next month in parliament, in line with programme provisions and completion of a review of financing assurances

• The review will confirm multilateral partners’ financing contributions and assess if debt restructuring is adequate, the global lender said in Sunday's statement

• Upon completion of the review, Sri Lanka will have access to the IMF's special drawing rights equivalent to about $345 million, taking the lender's total disbursed funds to the equivalent of $2.7 billion, it added

• In May, the IMF forecast 3 per cent growth this year for Sri Lanka as it approved ⁠a $700-million double tranche under the programme, to bolster reserves

• Sri Lanka, which imports all its fuel, faces downside risks from uncertainty over the Middle East war, global trade, and the impact of the El Niño weather phenomenon, the IMF said

• It urged the government to let domestic fuel prices adjust in line with international rates while protecting the vulnerable.