Colombo: The International Monetary Fund did not reach a staff-level agreement with Sri Lanka in its first review under a $2.9bn bailout package, due to a potential shortfall in government revenue generation, says the lender.
IMF delegation chief Peter Breuer said a second tranche of around $330 million under a credit programme will only be issued once the IMF gets a staff-level consensus, and there was no set schedule on when that would take place. Breuer spoke after a two-week visit to the country.
“Sri Lanka has made commendable progress in implementing difficult but much-needed reforms. These efforts are bearing fruit as the economy is showing tentative signs of stabilisation,” the IMF said in a statement.
“The team will continue its discussions in the context of the First Review with the goal of reaching a staff-level agreement in the near term.”
The IMF delegation said despite early signs of stabilisation, full economic recovery is not yet assured and growth momentum remains subdued.
The runaway inflation rate in Sri Lanka has decreased to 1.3 percent in September, its currency has increased by nearly 12 percent, and its foreign exchange reserves have increased over the past six months.
But despite additional steps that will probably be included in the future budget in mid-November, the island has had difficulty increasing its earnings.
Despite an improvement in income mobilisation over last year, the IMF predicted that revenue was expected to fall short of initial projections by nearly 15 percent by year end.