Restoring Economic Stability in Sri Lanka: An Overview of the IMF Extended Fund Facility

Abstract

On March 20, 2023, the International Monetary Fund (IMF) Board approved Sri Lanka's 17th IMF programme, under the Extended Fund Facility (EFF) arrangement, aimed at addressing the significant economic challenges faced by the country. This approval comes at a critical time for Sri Lanka, as it continues to grapple with a severe contraction, high inflation and public debt levels, fiscal imbalances, and vulnerabilities in the financial sector. Through the EFF, Sri Lanka will receive a total disbursement of USD 3 billion, over a period of 4 years (48 months), on a semi-annual basis (specifically in the months of March and September). However, receiving each disbursement will be contingent on a thorough review of Sri Lanka's progress towards fulfilling its commitments that will be conducted periodically. This article looks at seven key objectives the government of Sri Lanka has committed to, to restore macroeconomic stability in the country.