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IMF Executive Board Concludes 2024 Article IV Consultation with Sri Lanka and Completes the Second Review Under the Extended Fund Facility

Published

2 years ago

2024/06/13

Priyan

The Executive Board of the International Monetary Fund (IMF) completed the second review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing the authorities to draw SDR 254 million (about US$336 million). This brings the total IMF financial support disbursed so far to SDR 762 million (about US$1 billion). The Executive Board also concluded the 2024 Article IV Consultation with Sri Lanka.

The EFF arrangement for Sri Lanka was approved by the Executive Board on March 20, 2023 (see Press Release No. 23/79) in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion. The first review of the EFF was completed by the Executive Board on December 12, 2023 with disbursements of SDR 254 million (about US$337 million; see Press Release No. 23/439).

The EFF-supported program aims to restore Sri Lanka’s macroeconomic stability and debt sustainability, mitigate the economic impact on the poor and vulnerable, rebuild external buffers, safeguard financial sector stability, and strengthen governance and growth potential.

Signs of economic recovery are emerging. Real GDP expanded by 3 percent (y-o-y) in the second half of 2023. May 2024 inflation was 0.9 percent and gross international reserves increased to US$5.5 billion by end-April 2024. The primary balance improved to a surplus with tax revenue increasing to 9.8 percent of GDP in 2023. Despite improvements in non‑performing loans, pockets of vulnerabilities remain in the banking sector.

The recovery remains gradual, and the medium-term growth potential hinges on appropriate policy settings. Growth is projected to recover moderately in 2024-25 given constrained bank credit and fiscal consolidation, while facing uncertainties around the debt restructuring and policy direction following the elections. Inflation is expected to temporarily increase due to one-off factors. The current account is expected to remain positive in 2024, driven by improved tourist arrivals and remittances. Domestic risks could arise from waning reform momentum, especially on revenue mobilization. External risks are associated with intensified regional conflicts, commodity price volatility, and a global slowdown. Slow progress in debt restructuring could widen financing gaps.

Following the Executive Board’s discussion, Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:

“Sri Lanka’s performance under its Fund-supported program remains strong. All quantitative targets were met, except for the marginal shortfall of indicative target on social spending. Most structural benchmarks were either met or implemented with delay. Reforms and policy adjustment are bearing fruit. The economy is starting to recover, inflation remains low, revenue collection is improving, and reserves continue to accumulate. Despite these positive developments, the economy is still vulnerable and the path to debt sustainability remains knife-edged. Important vulnerabilities associated with the ongoing debt restructuring, revenue mobilization, reserve accumulation, and banks’ ability to support the recovery continue to cloud the outlook. Strong reform efforts, adequate safeguards, and contingency planning help mitigate these risks.

“To restore fiscal sustainability, sustained revenue mobilization efforts, promptly finalizing the debt restructuring in line with program targets, and protecting social and capital spending remain critical. Advancing public financial management will help enhance fiscal discipline, and strengthening the debt management framework is also needed.

“Monetary policy should continue prioritizing price stability, supported by a sustained commitment to refrain from monetary financing and safeguard central bank independence. Continued exchange rate flexibility and gradually phasing out the balance of payments measures remain critical to rebuild external buffers and facilitate external rebalancing.

“Restoring bank capital adequacy and strengthening governance and oversight of state-owned banks are top priorities to revive credit growth and support economic recovery.

“The authorities need to press ahead with their efforts to address structural challenges to unlock long-term potential. Key priorities include steadfast implementation of the governance reforms; further trade liberalization to promote exports and foreign direct investment; labor reforms to upgrade skills and increase female labor force participation; and state-owned enterprise reforms to improve efficiency and fiscal transparency, contain fiscal risks, and promote a level playing field for the private sector.

Executive Board Assessment

Executive Directors commended the authorities’ strong performance under the Fund‑supported program, noting that reforms are bearing fruit. The economy has started to recover, inflation remains low, revenue collection is improving, and reserves continue to accumulate. Directors underscored, however, that important vulnerabilities and uncertainties remain, including with respect to the ongoing debt restructuring and the upcoming elections. Against this backdrop, they called on the authorities to continue strengthening macroeconomic policies to restore economic stability and debt sustainability and to sustain the reform momentum to promote long‑term inclusive growth.

Directors underscored that restoring fiscal sustainability requires additional revenue measures underpinning the 2025 Budget, further tax administration reforms, as well as limiting tax exemptions and making them more transparent. They called for protecting growth‑enhancing and social spending, and for improving the social safety net. Directors welcomed the submission of the new Public Financial Management bill to Parliament, which would strengthen fiscal discipline and establish a solid fiscal framework. They noted that further efforts to strengthen the debt management framework are also needed. Directors welcomed the progress on achieving cost‑recovery in energy pricing, noting its criticality for containing risks from state‑owned enterprises (SOEs).

Directors welcomed the progress made to advance debt restructuring to restore Sri Lanka’s debt sustainability. They called for a swift finalization of the Memorandum of Understanding with the Official Creditor Committee and final agreements with the Export‑Import Bank of China. Directors stressed the importance of seeking comparable, transparent, and timely completion of restructurings with external private creditors consistent with program targets.

Directors emphasized that maintaining price stability remains the top priority for monetary policy, which requires anchoring inflation expectations, continuing to refrain from monetary financing, and the gradual unwinding of government security holdings as markets allow. They also stressed the importance of strengthening central bank independence. Directors underscored the need to continue building external buffers, while maintaining exchange rate flexibility to facilitate external rebalancing and preserve the credibility of the inflation targeting regime. They called for gradually phasing out the balance of payments measures.

Directors underscored the need to strengthen financial sector resilience to support the recovery. They called for swift completion of the restructuring of remaining domestic law, foreign currency loans and for adequate recapitalization of commercial and state‑owned banks. Directors welcomed the enactment of the Banking Act amendments and emphasized the importance of their effective implementation to enhance supervision and the governance of state‑owned banks. They also called for further efforts to strengthen the anti‑money laundering and counter‑terrorism financing framework.

Directors stressed that pressing ahead with governance and structural reforms, supported by development partners and IMF capacity development, is crucial to unlock growth potential. They welcomed the publication of the authorities’ action plan on the key governance reforms recommended in the Governance Diagnostic Report and called for its steadfast implementation. Directors also recommended prioritizing reforms to further liberalize trade, improve the investment climate and SOE efficiency, reduce gender gaps in the labor market, and mitigate climate vulnerabilities.

Sri Lanka: Selected Economic Indicators 2021–2029

	2021	2022	2023	2024	2025	2026	2027	2028	2029


GDP and inflation (in percent)
Real GDP	4.2	-7.3	-2.3	2.0	2.7	3.0	3.1	3.1	3.1
Inflation (average) 1/	6.0	45.2	17.4	7.0	5.8	5.4	5.2	5.1	5.0
Inflation (end-of-period) 1/	12.1	54.5	4.0	6.9	5.5	5.4	5.2	5.1	5.0
GDP Deflator growth	8.0	47.5	17.5	9.8	6.9	5.4	5.2	5.1	5.0
Nominal GDP growth	12.6	36.6	14.8	11.9	9.8	8.5	8.5	8.3	8.3

Savings and investment (in percent of GDP)
National savings	33.0	27.6	33.9	32.5	31.0	31.3	31.9	31.8	31.8
Government	-7.3	-6.4	-6.0	-3.4	-1.0	-0.1	0.3	0.7	0.7
Private	40.4	34.0	39.9	35.9	31.9	31.4	31.6	31.1	31.0
National investment	36.7	28.6	30.8	32.1	32.1	32.4	32.8	32.7	32.6
Government	7.4	5.5	3.7	5.0	5.1	5.2	5.1	5.2	5.2
Private	29.4	23.1	27.1	27.1	27.0	27.3	27.7	27.5	27.4
Savings-Investment balance	-3.7	-1.0	3.1	0.5	-1.1	-1.2	-0.9	-0.9	-0.8
Government	-14.7	-11.9	-9.6	-8.4	-6.0	-5.3	-4.8	-4.5	-4.4
Private	11.0	10.9	12.8	8.8	4.9	4.1	3.9	3.6	3.6

Public finance (in percent of GDP)
Revenue and grants	8.3	8.4	11.1	13.6	15.1	15.3	15.4	15.4	15.4
Expenditure	20.0	18.6	19.4	20.9	20.3	19.9	19.5	19.2	19.2
Primary balance	-5.7	-3.7	0.6	1.0	2.3	2.3	2.3	2.3	2.3
Central government balance	-11.7	-10.2	-8.3	-7.3	-5.2	-4.6	-4.1	-3.8	-3.8
Central government gross financing needs	31.0	34.1	27.8	24.9	23.7	20.5	16.6	13.1	11.9
Central government debt	102.7	115.9	109.8	108.8	108.4	108.3	106.6	103.2	100.1
Public debt 2/	114.8	126.3	115.7	114.2	113.1	112.5	110.2	106.5	103.1

Money and credit (percent change, end of period)
Reserve money	35.4	3.3	-1.5	18.8	11.0	8.5	8.5	8.3	8.3
Broad money	13.2	15.5	7.3	14.9	10.4	8.5	8.5	8.3	8.3
Domestic credit	19.5	18.8	-1.2	9.3	3.6	2.5	2.3	2.4	6.7
Credit to private sector	13.1	6.4	-0.8	7.2	9.2	9.3	9.5	9.4	9.3
Credit to private sector (adjusted for inflation)	7.2	-38.8	-18.2	0.2	3.4	4.0	4.3	4.3	4.3
Credit to central government and public corporations	26.5	31.1	-1.6	11.0	-0.9	-3.4	-4.7	-5.5	3.2

Balance of Payments (in millions of U.S. dollars)
Exports	12,499	13,106	11,911	12,913	13,624	14,261	14,903	15,591	16,384
Imports	-20,638	-18,291	-16,811	-20,059	-22,565	-23,706	-24,362	-25,255	-26,363
Current account balance	-3,285	-744	2,644	412	-926	-1,031	-804	-819	-840
Current account balance (in percent of GDP)	-3.7	-1.0	3.1	0.5	-1.1	-1.2	-0.9	-0.9	-0.8
Current account balance net of interest (in percent of GDP)	-2.1	0.1	4.3	2.8	1.3	1.1	1.5	1.6	1.5
Export value growth (percent)	24.4	4.9	-9.1	8.4	5.5	4.7	4.5	4.6	5.1
Import value growth (percent)	28.5	-11.4	-8.1	19.3	12.5	5.1	2.8	3.7	4.4

Gross official reserves (end of period)
In millions of U.S. dollars	3,139	1,898	4,387	5,605	7,174	9,262	13,466	15,105	15,286
In months of prospective imports of goods & services	2.0	1.2	2.4	2.7	3.3	4.1	5.8	6.2	6.3
In percent of ARA composite metric	24.7	16.3	37.8	47.9	58.6	73.1	100.2	108.7	108.5
Usable Gross official reserves (end of period) 3/
In millions of U.S. dollars	1,565	462	2,951	4,169	7,174	9,262	13,466	15,105	15,286
In months of prospective imports of goods & services	1.0	0.3	1.6	2.0	3.3	4.1	5.8	6.2	6.3
In percent of ARA composite metric	12.3	4.0	25.4	35.6	58.6	73.1	100.2	108.7	108.5
External debt (public and private)
In billions of U.S. dollars	58.4	57.4	52.7	53.6	55.6	58.0	62.3	64.0	65.8
As a percent of GDP	65.9	77.0	62.5	61.1	64.4	65.7	68.5	67.2	65.0

Memorandum items:
Nominal GDP (in billions of rupees)	17,612	24,064	27,630	30,917	33,958	36,839	39,959	43,287	46,869
Exchange Rate (period average)	198.8	322.6	327.5	…	…	…	…	…	…
Exchange Rate (end of period)	200.4	363.1	323.9	…	…	…	…	…	…
*Sources: Data provided by the Sri Lankan authorities and IMF staff estimates.*
IMF Communications Department

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US launches fresh strikes on Iran as Trump warns Tehran it ‘better behave’

Published

13 hours ago

2026/07/16

Priyan

Iran's state-run broadcaster reported that the country's army had carried out attacks on US targets [BBC]

The United States said it had launched fresh strikes against Iran on Wednesday evening as President Donald Trump warned Tehran it “better behave”.

The US military said “Iranian military capabilities used to threaten vessels” moving through the Strait of Hormuz had been targeted, and that it had separately fired on a ship attempting to violate its renewed blockade of Iran’s ports.

It came after Iran claimed it had struck US military targets in the region, including in Bahrain and Kuwait, as a fifth day of renewed hostilities strained their preliminary deal to end the war.

Iran’s top negotiator, Mohammad Bagher Ghalibaf, meanwhile told state media Tehran had “no reason” to abide by the deal if it did benefit from it.

Trump had threatened late on Tuesday to attack bridges and power plants should Iran not return to talks next week.

Asked by reporters late on Wednesday whether he would give a deadline before doing so, he responded: “I ‌don’t like giving deadlines, but they pretty ⁠much know, they know the story… they better behave.”

He later told delegates at a defence summit that Iran was “not happy right now”.

“They want to settle so badly. They don’t like what we’re doing,” he said. “We’ll find out whether we want to settle with them or if we just finish it off.”

Ghalibaf however said Iran’s national security depended on Tehran maintaining “Iranian arrangements” in the strait.

He added that negotiation – along with war – was part of Iran’s strategy of resistance as it engaged an “existential” conflict with the US.

The escalation in Trump’s rhetoric came after he said a 20% toll he had threatened to impose in the Strait of Hormuz would be replaced by “massive” trade and investment deals with Gulf states.

A previous threat by Trump to bomb Iran’s civilian infrastructure, which was made in April, drew condemnation at the time from UN human rights chief Volker Türk, who said: “Under international law, deliberately attacking civilians and civilian infrastructure is a war crime.”

The latest US strikes marked the second wave its military said it had carried out during daylight hours on Wednesday. It said it had “further degraded Iran’s ability to attack commercial shipping in the Strait of Hormuz” earlier in the day.

A 90-minute wave was used to target Iran’s coastal defences and cruise missile storage and launch sites on Greater Tunb Island, US Central Command (Centcom) added.

Centcom also said it had redirected two commercial vessels since reimposing its blockade on Iranian ports on Tuesday evening, which stops vessels from transiting to and from Iranian ports and coastal areas.

The blockade had previously been lifted as part of a deal that was struck by the two countries last month – known as a memorandum of understanding – that aimed to end the months-long conflict.

However, a dispute over the strait has become a key point of contention.

In response to the renewal of the US blockade, Iran’s Revolutionary Guard Corps (IRGC) warned the US that it should “expect the closure of other oil and gas export routes that serve the interests of the United States and its allies”. It did not elaborate on which routes could be affected.

Ongoing US-Iran hostilities have underscored the strategic importance of the Strait to the global economy, with a sharp rise in oil prices triggered by tanker traffic virtually stalling through the key shipping lane.

[BBC]

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Argentina stun England in 2-1 comeback win to reach 2026 World Cup final

Published

14 hours ago

2026/07/16

Priyan

Argentina's Enzo Fernandez, Cristian Romero and Nicolas Otamendi celebrate after the match as England's Jude Bellingham looks dejected [Aljazeera]

Lautaro Martinez scored a 92nd-minute winner as Lionel Messi inspired World Cup holders Argentina to a stunning comeback to beat England 2-1 and set up a final with European football champions Spain.

England had been on course to reach their first FIFA World Cup final since 1966 after Anthony Gordon fired them into the lead 10 minutes into the second half of the semifinal in front of 68,239 fans in Atlanta on Wednesday.

The great rivalry between these nations has produced several memorable contests on the World Cup stage through the years, and this will be remembered as the stuff of legends in Argentina as the South Americans denied England with two late sucker punches.

Messi set up Enzo Fernandez to fire in an 85th-minute equaliser, and then, with extra time looming, crossed for substitute Lautaro Martinez to head in the winner in the second minute of stoppage time.

It was maybe not quite up there with Diego Maradona’s legendary display in putting England to the sword in 1986, but the goals this time brought Argentina back from the dead and kept alive their hopes of winning back-to-back World Cups.

No team has retained the trophy since Brazil in 1962, and now, Messi will become just the second player after Brazilian great Cafu to appear in three World Cup finals. Italy are the only other side to defend a World Cup crown.

The 2026 final will take place at New York New Jersey Stadium in New Jersey on Sunday, as the first 48-team World Cup boils down to a confrontation between the reigning champions of Europe and South America.

Messi had waited until the age of 39 to get the chance to play against England, and he will now face Spain for the first time in a competitive game.

His career appeared to be complete when he dragged Argentina to glory in 2022 in Qatar, but he is clearly not done yet.

Soccer Football - FIFA World Cup 2026 - Semi Final - England v Argentina - Atlanta Stadium, Atlanta, Georgia, U.S. - July 15, 2026 Argentina's Lautaro Martinez celebrates scoring their second goal with Lionel Messi REUTERS/Agustin Marcarian — *Argentina’s Lautaro Martinez celebrates with Lionel Messi [Aljazeera]]*

England, though, will have huge regrets as they head to Miami to play France in Saturday’s third-place playoff, a game neither team will want to contest.

The prospect of a first World Cup final appearance since their sole triumph 60 years ago was a momentous one, and they were so close, but will live to regret sitting back after Gordon’s opener.

Given the deep-rooted rivalry between these nations, this was always likely to be a game with an edge, and there was a palpable sense of tension at Atlanta Stadium.

Argentina’s players were clearly fired up, partly by a determination to hold onto their World Cup crown but also by a sense of what this fixture means.

That translated into a niggly contest, pockmarked by fouls in the first half, including Elliot Anderson being booked for scything down Messi.

There were no real chances to speak of in the first half, but England struck in the 55th minute.

Kane was involved in the buildup as the ball eventually came to Morgan Rogers on the right, and he whipped in a low cross towards the back post where Gordon stole in front of Nahuel Molina to score.

But this was the stadium where Argentina produced a stunning comeback from 2-0 down to beat Egypt in the last 16, and they were not done.

They threw everything at their opponents, as Jordan Pickford made a great save from a Nico Gonzalez header, and Alexis Mac Allister was then denied by the post in the 76th minute.

Fernandez was denied from range by Pickford, but moments later, he equalised, controlling a Messi pass on the edge of the area and letting fly past the goalkeeper.

Argentina smelled blood, and Mac Allister again hit the post before England failed to clear, and Martinez headed in the winner from an exquisite Messi cross to spark chaotic scenes of celebration and leave England completely deflated.

[Aljazeera]

The key men for Thomas Tuchel’s side during this campaign have been Jude Bellingham and captain Harry Kane, yet they failed to deliver on this occasion, and England’s players slumped to the turf at full-time.

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England vs Argentina: FIFA World Cup semifinal – Messi, Kane and prediction

Published

1 day ago

2026/07/15

Priyan

Argentina's forward Lionel Messi has played more than 200 international matches, but never faced England [Aljazeera]

Years of political history and football rivalry will collide in Atlanta when England face Argentina in a World Cup semifinal for the ages.

From the controversial “Hand of God” goal by Diego Maradona in 1986 to David Beckham being red-carded for kicking Diego Simeone in 1998, sporting contests between England and Argentina are often theatrical, tense and tricky.

Then, there is also the lingering sovereignty dispute over the Falkland Islands.

Divided by geography and conflict, England and Argentina are vastly different in many ways, yet at this World Cup, they have at least one thing in common – both have made a habit of surviving on the edge.

For England, the plan is simple: Find a way to stop the magical force of Lionel Messi and reach their first final in six decades.

And for Argentina? To grind again and chase history in back-to-back finals.

Here’s everything you need to know about this semifinal:

How did England and Argentina reach the semifinals?

England topped Group L with seven points, beating Croatia and Panama and drawing with Ghana. They needed a second-half comeback to beat the Democratic Republic of the Congo in the round of 32 and knocked out co-hosts Mexico3-2 in a scintillating last-16 contest at the iconic Azteca Stadium.

In the quarterfinals, they came from a goal down to beat Norway 2-1 in extra time.

Argentina had a strong showing in the first round, topping Group J by beating Algeria, Austria and Jordan. In the round of 32, they were pushed to their limits before squeezing past Cape Verde 3-2 in extra time, and came from two goals down to beat Egypt 3-2 in a controversial last-16 contest which drew allegations of officiating bias.

Against Switzerland in the quarterfinals, they again played a full 120 minutes before securing a 3-1 win.

(COMBO) This combination of file photos created on July 12, 2026, shows England's forward #09 Harry Kane in Miami on July 11, 2026 (L); and Argentina's forward #10 Lionel Messi in Miami Gardens on July 3, 2026. England and Argentina will meet in a 2026 World Cup semi-final football match at the Atlanta Stadium in Atlanta on July 15, 2026. (Photo by Roberto SCHMIDT and Chandan KHANNA / AFP) — *Harry Kane, left, and Lionel Messi, right, are both in the race for the Golden Boot [Aljazeera]*

At last, Messi meets England

From winning the World Cup to Copa America, lifting the Champions League trophy to the Ballon d’Or, and kissing the Golden Ball, Messi has achieved almost everything possible in football.

But in his 21 years playing for Argentina, there is one thing he has not done: face England.

The 39-year-old forward will play against the Three Lions for the first time, 21 years on from the red card he received in the early days of his career, which denied him the chance in a 2005 friendly.

“I have played against everyone except England, and it is special because they are a major nation, a powerhouse, and it is always nice to play against a side like that, especially in a World Cup semifinal,” Messi said.

With eight goals in six matches, Messi is enjoying a World Cup campaign like no other as he bids for his first Golden Boot. As the captain, he is also leading Argentina’s charge to become the first team to retain the World Cup since Brazil in 1962.

Should they beat England, Argentina would be in their third final in four World Cups, and Messi could follow in the footsteps of Brazil’s great, Cafu, who played in three in a row from 1994 to 2002 – even Maradona only ever played in two.

“Getting to another semifinal is not a normal, mundane thing, so this is something we should really enjoy because we don’t know if it will happen again,” Messi said.

Pickford backs England to keep cool in tense clash

Generations in England have not seen their team lift a major trophy. Their only success came when hosting the 1966 World Cup.

This current squad – headlined by the dynamic duo of Harry Kane and Jude Bellingham – is, however, within touching distance of making history, by not only winning a second trophy, but a first on foreign soil.

Before the game, though, Thomas Tuchel’s side knows the pressure is firmly on them, but goalkeeper Jordan Pickford believes the team can cope.

“You’ve seen throughout the tournament our desire to win tackles. We’ve not got into any scuffles or anything,” he said on Monday.

“We’ve been very well respected within the game. Decisions go our way [or] they don’t go our way, we just reset, we go again, and we let the football do the talking.”

England, fourth in the FIFA rankings, two spots below Argentina, are set to feature in a fourth semifinal in the last five major tournaments.

Soccer Football - FIFA World Cup 2026 - Quarter Final - Norway v England - Miami Stadium, Miami Gardens, Florida, U.S. - July 11, 2026 England's Jude Bellingham and Harry Kane celebrate after the match as England qualify for the semi finals of the World Cup REUTERS/Paul Childs — *England’s Jude Bellingham and Harry Kane have scored 12 of the team’s 13 goals at the tournament [Aljazeera]*

England vs Argentina predictions

As of Tuesday, Opta’s supercomputer gives England a 39.1 percent probability of winning in regulation time, while Argentina’s chances of winning are 31.6 percent.

The model estimates a 29.3 percent probability of the game going to extra time.

Who is the referee for England vs Argentina?

Referee: Ismail Elfath (US)
Assistant referee 1: Corey Parker (US)
Assistant referee 2: Kyle Atkins (US)
Fourth official: Maurizio Mariani (Italy)
Reserve assistant referee: Daniele Bindoni (Italy)

Where is England vs Argentina being played?

England will play Argentina in the second semifinal at Atlanta Stadium, commonly known as Mercedes-Benz Stadium, in Atlanta, Georgia, United States. It is the last of the seven World Cup matches held at this venue, which has a capacity of 68,239 for the tournament.

The stadium, boasting a retractable roof and a 360-degree halo video display, undoubtedly has the most space-age architecture of the 16 host cities.