ECONOMYNEXT – The International Monetary Fund wants Sri Lanka’s upcoming 2026 budget parameters to be in line with its External Fund Facility (EFF) programme as the prior action before the global lender’s board approving the Staff Level Agreement with the island nation’s authorities, a top official said.
IMF staff and the Sri Lankan authorities have reached staff-level agreement on the country’s economic policies to conclude the Fifth Review of Sri Lanka’s reform program supported by the EFF.
Once the review is approved by the IMF Executive Board, Sri Lanka will have access to about US$347 million in financing. However, Sri Lanka has to accomplish a prior action.
“We have one prior this time. It is about the budget. And it is about ensuring that the budget parameters are in line with our program,” Evan Papageorgiou, the IMF Mission Chief for Sri Lanka told reporters at a media briefing after 15-day discussions with authorities.
The parameters include a primary fiscal surplus target of 2.3 percent of the GDP.
“Along side with that, we’re also judging the quality of the spending problems that are going to the budget. And this is something we have had a lot of discussions with the authorities, and we are keen and continue engaging with that,” Papageorgiou said.
If Sri Lanka complies with the expected prior action, the global lender will disburse the sixth tranche of the USD3 billion EFF. Already Sri Lanka has received around USD1.65 billion in the first five tranches. (Colombo/October 09/2025)