IMF to decide on $ 1.5 b program resumption today

• IMF Executive Board to make decision based on fifth review 
• Program likely to be extended till June 2020 
• Remaining $ 500 m to be disbursed in three tranches
• IMF says extension important to continue reforms

The Executive Board of the International Monetary Fund (IMF) will decide on whether it will be resuming the $ 1.5 billion Extended Fund Facility (EFF) with Sri Lanka today and extending the timeline of the program till 2020.

The Executive Board, which will meet on Monday in Washington, will decide whether to accept the proposal to resume the program and extend it by one year. If the Executive Board gives the green light, it will disburse the sixth tranche of the program.

The IMF program was initially expected to end in June, but after the Constitutional crisis last year that led to a sovereign rating downgrade, the Government of Prime Minister Ranil Wickremesinghe negotiated to extended the program to 2020 but kept the funding unchanged. The decision was reached between the high profile Government delegation and the IMF staff in March.

 The proposal was subsequently forwarded to the IMF Executive Board for approval. 

“On the substance of IMF help…. our Executive Board will consider the request from the authorities to complete the review of the fifth review under our program,” IMF spokesman Gerry Rice told reporters last Thursday. 

“I think this is the important issue, to extend that program by one additional year which would mean until June 2020. The extension will provide additional time to the authorities to anchor macroeconomic stability and complete their reform agenda,” Rice added.

The IMF has already disbursed about $ 1 billion of the $ 1.5 billion funding. The remaining $ 500 million under the arrangement will be rephrased evenly in three tranches over three semi-annual reviews under that extension, the official said.

In the days after the Easter Sunday attacks, the IMF said initial financial market pressures appeared to have been contained but warned that the Government would have to take strong action to shore up investor confidence and put in place measures to assist affected sectors such as tourism.

“Decisive policy and security measures by the authorities will be important, in particular for tourism, which accounts for 5% of GDP, to build on the strong performance of recent years,” IMF Sri Lanka Mission Chief Manuela Goretti said in short remarks issued to media.