Sri Lanka will exit current IMF programme in 2027 – Minister Bimal

Minister Bimal Rathnayake says the government intends to complete Sri Lanka’s current International Monetary Fund programme when the four-year Extended Fund Facility arrangement expires in March 2027, while continuing the country’s normal engagement with the IMF thereafter.

Speaking during a television interview, Rathnayake said the government did not currently see a need to enter another IMF programme linked to debt restructuring after the existing arrangement ends.

“We will definitely exit this agreement,” Rathnayake said, referring to the current programme. “But the IMF and the World Bank are international institutions. As a country operating within the global economic system, we have to maintain our dealings with them in a manner suitable for us.”

The current four-year EFF was approved in March 2023 and is scheduled to expire on March 19, 2027. The IMF says two reviews remain, with discussions on the seventh review continuing after its latest mission ended without a staff-level agreement.

Rathnayake said the government did not expect Sri Lanka to require another debt restructuring programme with the IMF, while acknowledging that the country would remain bound by its existing debt repayment commitments for years.

He also criticised aspects of the debt restructuring terms negotiated under the previous administration, particularly mechanisms under which repayments to some creditors can vary depending on Sri Lanka’s economic performance.

“If we grow the economy, the amount of debt we have to repay increases,” he said, arguing that this could reduce the resources available to pass the benefits of economic growth on to the public.

Rathnayake said the government was examining available financial-market mechanisms to minimise what it considers the adverse impact of some existing debt terms.

His comments come as questions emerge over Sri Lanka’s relationship with the IMF after the current EFF. IMF Mission Chief Evan Papageorgiou said this week that any request for a successor programme would be a decision for the Sri Lankan government.

The IMF, meanwhile, said following its September 10-23 mission that discussions with the government would continue “in the near term” on the policies and parameters required to conclude the seventh review. (Newswire)

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