News Today: Learn why the IMF urges increased social spending boost for Sri Lanka’s inclusive economic recovery

The International Monetary Fund (IMF) has reached a staff-level agreement with Sri Lanka for the third review of its Extended Fund Facility arrangement. IMF Sri Lanka Senior Mission Chief Peter Breuer emphasized the need for increased social spending in the upcoming 2025 budget to support vulnerable populations.

“Completing the reform agenda for inclusive and sustainable growth will benefit all Sri Lankans,” Breuer stated. While commending the government’s ambitious reforms, he highlighted the necessity of meeting the program’s social spending targets, especially for initiatives like Aswesuma, which aim to improve the adequacy and coverage of social safety nets.

Speaking at the Central Bank on November 23, Breuer called for the submission of a 2025 budget aligned with the IMF’s revised priorities. He stressed that maintaining macroeconomic stability and restoring debt sustainability requires responsible fiscal policies, including revenue mobilization and spending restraint.

The IMF’s analysis shows Sri Lanka met most quantitative performance criteria and indicative targets for June and September 2024 but consistently fell short on social spending. The new agreement, pending executive board approval, mandates redoubled efforts to ensure adequate resources for the poor and vulnerable while upholding fiscal discipline.

This initiative underscores the IMF’s focus on achieving inclusive economic recovery while securing Sri Lanka’s long-term prosperity.