IMF approved a three year EFF of USD 1.5bn (SDR 1.1bn) for Sri Lanka to support the Balance of Payment position and government’s economic reform agenda.
- Fiscal consolidation: Structural economic adjustments via revenue based fiscal consolidation to expand fiscal space for maneuver and allow for more spending on growth drivers in the medium term.
- Revenue mobilization: Revenue mobilization to ensure increased reliability of revenue sources and improve tax efficiency to minimize the volatility in public expenditure.
- Public financial management reforms: Public expenditure management and fiscal risk monitoring mechanism to improve accountability and transparency of government fiscal operations.
- State enterprise reforms: Enhance oversight over SOEs aimed at improving financial discipline
- Transition to flexible inflation targeting under a flexible exchange rate regime: Adoption of an inflation targeting monetary policy mechanism and transition to a flexible exchange rate regime are to be utilised as effective monetary policy tools of macroeconomic management.
- Reforms in the trade and investment regime: Trade reforms aimed at promoting trade and investment climate holds the key to improving government revenue in a low trade tariff regime which is complimented with a high trade volume.
For further details on the key points discussed above, download the “Key Insights-6 Pillars: IMF Extended Facility Arrangement- 2016