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The IMF urged Sri Lanka to enhance social spending and ensure inclusive economic growth while maintaining fiscal discipline and meeting reform targets under its Extended Fund Facility.
The IMF reached a staff-level agreement with Sri Lanka on the third review of its Extended Fund Facility, emphasizing the need for increased social spending in the 2025 budget to ensure inclusive growth. IMF Senior Mission Chief Peter Breuer commended the government’s reform efforts while urging targeted support for the poor through improved safety nets like Aswesuma. He highlighted the importance of maintaining macroeconomic stability, responsible fiscal policies, and debt sustainability. While Sri Lanka met most performance criteria, it consistently missed social spending targets. With 4% economic growth, low inflation, and $6.4 billion in reserves, the IMF projects an additional $330 million in support if reforms succeed, stressing equitable growth distribution.
