ECONOMYNEXT \u2013 Sri Lanka is in discussion with the International Monetary Fund (IMF) on a new programme after the completion of the current Extended Fund Facility (EFF), Deputy Finance Minister Anil Jayantha told Parliament on Thursday.<\/p>\n
\u201cThe current IMF EFF program is on track to conclude successfully in March 2027, marking the completion of its economic reform and recovery efforts under the arrangements,\u201d the Deputy Minister said in response to a question raised by the opposition.<\/p>\n
\u201cIn parallel, discussions are currently underway regarding the options beyond the current program, reflecting a shift from crisis-driven support towards a more sustainable, long-term growth-targeted engagement model.\u201d<\/p>\n
Sri Lanka sought IMF deal after the island nation experienced an unprecedented economic collapse that culminated in its first-ever sovereign default in April 2022.<\/p>\n
Severely depleted foreign exchange reserves, exacerbated by years of loose fiscal policies, high-profile tax cuts, organic farming mandates that damaged agricultural yields, and the economic blow dealt by the COVID-19 pandemic, left the island nation unable to service its $51 billion external debt stock.<\/p>\n
The resulting crisis triggered severe shortages of fuel, medicines, and staple foods, hyperinflation exceeding 70%, and widespread public protests that ultimately forced the resignations of key government figures, including former President Gotabaya Rajapaksa.<\/p>\n
The four-year, $3 billion EFF program was conditioned on a rigorous slate of macroeconomic and structural reforms, including tax hikes, energy cost-reflective pricing, expenditure controls, and strict central bank independence.<\/p>\n
Central to the arrangement was a complex sovereign debt restructuring process, requiring the island nation to negotiate bilateral debt relief with major sovereign creditors, such as China, India, and Paris Club members, alongside commercial international sovereign bondholders.<\/p>\n
The implementation of the EFF has since driven a significant macroeconomic turnaround, marked by a stabilizing exchange rate, a rebuild of gross official foreign exchange reserves, and a return to positive GDP growth.<\/p>\n
However, maintaining compliance with program targets has generated considerable social and political friction.<\/p>\n
Demands for broader anti-corruption measures, tax fairness, and enhanced social safety nets remain high as the government balances strict IMF revenue targets against domestic pressures to alleviate the elevated cost of living. (Colombo\/October 08\/2026)<\/p>","protected":false},"excerpt":{"rendered":"
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