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International Monetary Fund (IMF) executive board has approved (21st Mar 2023) a $3-billion four-year extended financing arrangement for Which Country?
A)
Sri Lanka
B)
Pakistan
C)
Bangladesh
D)
Ukraine

Correct Answer :   Sri Lanka


The International Monetary Fund (IMF) Executive Board approved (21st Mar 2023) a 48-month extended arrangement under the Extended Fund Facility (EFF) of SDR 2.286 billion (about US$3 billion) to support Sri Lanka’s economic policies and reforms.

Sri Lanka has been facing a severe economic crisis as a result of past policy missteps and economic shocks. We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups, and about the economic costs of the delay in the country’s access to external financing.

21st Mar 2023 Board approval marks an important step towards the resolution of the crisisSri Lanka will immediately receive an initial disbursement of about US$330 million from the EFF arrangement, which is expected to catalyze new external financing including from the Asian Development Bank and the World Bank.

The reform program supported under the EFF arrangement is built on strong policy measures and prioritizes :

(i) an ambitious revenue-based fiscal consolidation, accompanied by stronger social safety nets, fiscal institutional reforms, and cost-recovery based energy pricing to ensure the state’s ability to support all its essential expenditures;

(ii) restoration of public debt sustainability, including through a debt restructuring to ensure stable financing of the government’s operations;

(iii) a multi-pronged strategy to restore price stability and rebuild reserves under greater exchange rate flexibility in order to alleviate the burden of inflation, particularly on the poor, to foster an environment of investment and growth, and to ensure Sri Lanka's ability to purchase essential goods from abroad;

(iv) policies to safeguard financial sector stability to ensure that the financial sector can play its key role in supporting economic growth;

(v) structural reforms to address corruption vulnerabilities and enhance growth..

Source : IMF

Published On : March 21, 2023
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