IMF Open to Program Adjustments Amid Shocks: CBSL 📈

• Policy Flexibility: CBSL Governor Dr. Nandalal Weerasinghe confirmed that the IMF-supported EFF framework is not rigid. It allows Sri Lanka to make policy adjustments, including targeted subsidies and key performance target revisions, via periodic negotiations. • Subsidies & Relief: The IMF has not prohibited subsidies. The government can implement targeted assistance while maintaining fiscal discipline. A prime example is the Rs. 500 billion allocated post-Cyclone Ditwah last year, which complied with IMF limits. • Targets & Reviews: Net International Reserve (NIR) targets are reviewed periodically and adjusted based on global and domestic shocks. Revisions were already incorporated into the combined fifth and sixth reviews of the EFF program, which are expected to be approved by the IMF Executive Board today (Wednesday). • Energy Sector: Cost-reflective pricing requirements linked to fuel pricing under the IMF framework have been consistently maintained. • Future Outlook: As Sri Lanka moves closer to completing the current arrangement, the Governor stated that deciding whether to enter a successor IMF program rests entirely with the government.