IMF Completes Review of Sri Lanka, Enabling Fund Disbursement

(Bloomberg) -- The International Monetary Fund's executive board completed a sixth review of Sri Lanka's economic performance, enabling the disbursement of about $164 million in supporting funds.

This brought total disbursements under the Extended Fund Facility arrangement to about $1.31 billion, the IMF said in a statement dated Nov. 1 on its website.

Sri Lanka's economy is gradually recovering from the impact of the Easter Sunday terrorist attacks, the IMF said. It projected the nation's growth would accelerate to 3.5% in 2020 from 2.7% in 2019, as tourist arrivals and related activities slowly recover.

“Sustaining fiscal policy discipline remains critical to strengthen resilience and support growth, as important downside risks remain, amid heightened external and domestic uncertainty,” the Executive Board's Deputy Managing Director and Acting Chair Mitsuhiro Furusawa said.

The nation's central bank should maintain a data-dependent monetary policy, Furusawa said. The new Central Bank Act will be a milestone reform toward the adoption of flexible inflation targeting, he said.

“Efforts to build reserves should be sustained to protect the economy against shocks, allowing for exchange-rate flexibility in the event of market pressures.”

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