Finance Ministry says working on implementing prior actions agreed with IMF

Saturday, 3 September 2022 00:16 - - {{hitsCtrl.values.hits}}

To make a presentation to creditors in the next few weeks to update them on most recent macroeconomic developments, main areas of reform package agreed upon with IMF staff and next steps of debt restructuring process

Finance Secretary Mahinda Siriwardena

The Finance Ministry said it is working on implementing the prior actions agreed upon under the Staff-Level Agreement (SLA) and on securing the financing assurances needed from Sri Lanka's official bilateral creditors to obtain the adoption of the $ 2.9 billion worth four-year program by the IMF Executive Board.

“The authorities have been working with their international financial and legal advisors on their debt restructuring strategy,” the Finance Ministry said in a statement. “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,” it added.

The Finance Ministry’s assurance of focus on prior actions was following the authorities of the Democratic Socialist Republic of Sri Lanka on Thursday announcing that they have reached a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) on a four-year program (the Program) to be supported by an arrangement under the Extended Fund Facility (EFF) of about $ 2.9 billion.

The announcement was made at the end of the mission conducted from 24 August 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 on a package of reforms aimed at restoring macroeconomic stability and public finance sustainability in the country.

Upon the announcement, President and Finance Minister Ranil Wickremesinghe 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 Finance Ministry said the agreed economic reform package is designed to comprehensively address 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

III. To unlock the country's growth potential through structural reforms and improvement in governance

It also said that reaching a 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.

Interim Budget passed with 120 voting in favour