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IMF Emphasizes Thoughtful Development of EFF Program Amid Sri Lanka’s Economic Challenges

During a recent media briefing following the conclusion of the Second Review of Sri Lanka’s $3 billion four-year Extended Fund Facility (EFF) program and Article IV consultation, the International Monetary Fund (IMF) shared a candid assessment of the country’s economic trajectory. Peter Breuer, the IMF’s Senior Mission Chief for Sri Lanka, highlighted that the EFF program was the outcome of robust discussions and careful deliberation in 2022, with subsequent periodic reviews ensuring its coherence.

Breuer acknowledged the IMF’s receptiveness to alternative suggestions from various political parties regarding the attainment of program objectives. However, he stressed that such proposals must align with realistic and achievable goals within the program’s timeframe. He emphasized the critical importance of preserving the hard-won gains made by the Sri Lankan people over the past two years, cautioning against any actions that could potentially unravel progress.

In light of recent positive economic indicators, including consecutive quarters of growth after a prolonged period of contraction, Breuer underscored the necessity of maintaining momentum. He warned against the risk of reverting to a “vicious cycle,” urging sustained efforts to uphold the beginnings of a virtuous economic cycle.

Sarwat Jahan, IMF’s Resident Representative in Sri Lanka, echoed Breuer’s sentiments, emphasizing the significance of continuing reforms to achieve debt sustainability and foster robust economic growth. Jahan highlighted the pivotal role of ongoing reform momentum in steering Sri Lanka towards lasting recovery and inclusive economic advancement.

The IMF’s stance underscores the delicate balance facing Sri Lanka—a nation teetering on the edge of economic resurgence but at risk of regressing without steadfast commitment to reform and prudent economic management. As Sri Lanka navigates these challenges, the IMF remains committed to supporting the country’s efforts to secure a stable and prosperous future.

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