The International Monetary Fund (IMF) has approved a disbursement of US$695 million to Sri Lanka under its Extended Fund Facility (EFF) programme despite the country breaching two key programme conditions.
The IMF completed the combined fifth and sixth reviews of Sri Lanka’s reform programme and noted that the country failed to meet performance criteria related to:
- Avoiding new external payment arrears
- Preventing the imposition or intensification of import restrictions
What is the Extended Fund Facility (EFF)?
About: The Extended Fund Facility is a lending mechanism of the IMF that provides financial assistance to countries facing serious medium-term balance of payments problems caused by structural weaknesses.
Objective: The EFF aims to help countries undertake long-term structural reforms needed to restore macroeconomic stability and sustainable growth.
Key Features
- Provides longer programme duration compared to standard IMF arrangements
- Offers extended repayment periods
- Supports structural reforms in areas such as:
- Fiscal management
- Governance
- Public sector reforms
- External sector stability
Eligibility: All IMF member countries facing actual or potential external financing needs are eligible for EFF assistance. The facility is commonly used by advanced and emerging market economies, though low-income countries may also access it alongside the Extended Credit Facility (ECF).
Conditionalities: Disbursements under the EFF are conditional upon compliance with quantitative performance criteria and structural reform commitments agreed between the IMF and the borrowing country.
Source: IMF
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