Saturday, October 1, 2022
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Will IMF staff level agreement solve everything?

The four year multi-tranche USD 2.9B “staff level” agreement is not the end. It requires Sri Lanka to undertake publicly unspecified “prior actions” before it is approved by the IMF’s.

If Sri Lanka satisfies this, the USD 2.9B will be disbursed in tranches over a four year period. Associated with each disbursement is Sri Lanka having to meet conditions. If it does not, tranches will be withheld.

However, this is not the end. Far from it, the USD 2.9B is less than the bilateral and multilateral aid Sri Lanka will receive this year. This whole exercise is conditioned on Sri Lanka being bailed out and implementing the associated reforms to secure a sufficient credit rating and investor confidence to access international capital markets.

If it cannot do this, it falls further into the abyss.

IMF Statement: https://www.imf.org/en/News/Articles/2022/09/01/pr22295-imf-reaches-staff-level-agreement-on-an-extended-fund-facility-arrangement-with-sri-lanka

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