President Anura Kumara Dissanayake has said Sri Lanka is making strong efforts to reach a staff-level agreement with the International Monetary Fund (IMF) by Thursday, which could pave the way for the release of two IMF tranches totalling USD 700 million before the end of May.
The President said IMF teams are currently present in the country and discussions are ongoing. He noted that in previous instances, Sri Lanka typically concluded negotiations locally and secured the staff-level agreement in Washington DC. However, he said the government is now working to finalise the agreement while IMF officials are still in Sri Lanka.
If the staff-level agreement is reached by Thursday (9), the President said Sri Lanka would be eligible to receive funding from both the fifth and sixth IMF reviews, amounting to approximately USD 700 million, before the end of May.
The President also said discussions have been held with the Asian Development Bank (ADB), noting that the ADB President and a delegation recently visited Sri Lanka. He said extensive talks were conducted, resulting in agreement on approximately USD 1.2 billion in grants to be provided within the year.
In addition, the President said discussions have been held with the World Bank on several projects, and expectations remain regarding additional dollar-denominated support.
He said that when combined, support from the IMF, the ADB, and the World Bank significantly reduces the risk of Sri Lanka facing a foreign exchange reserve shortage.
Highlighting recent developments, the President said that for the first time in Sri Lanka’s history, the Central Bank purchased USD 700 million from the market during January and February, a move he described as significant. He said these market purchases contributed to foreign reserves approaching USD 7 billion.
However, he noted that dollar purchasing from the market has recently slowed, while the government and the Central Bank are required to service existing debt repayments. As a result, he said there is a possibility that reserves may decline by May compared to levels recorded at the end of February.
Despite this, the President said that if the expected USD 700 million IMF disbursement and agreed support from the Asian Development Bank materialise, Sri Lanka would be in a position to manage pressures on its foreign reserves.