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Source: The post is based on the article “IMF announces $3-b credit facility to revive Lanka’s economy” published in Indian Express on 22nd March 2023
What is the News?
The International Monetary Fund(IMF) has cleared a $3-billion-Extended Fund Facility (EFF) for Sri Lanka.
What is an Extended Fund Facility(EFF)?
Setup by: International Monetary Fund(IMF)
Purpose: Provide assistance to countries experiencing serious payment imbalances because of structural impediments or slow growth and an inherently weak balance-of-payments position.
– To support comprehensive programs with a focus on policies needed to correct structural imbalances over an extended period.
Why has the IMF provided a $3-billion Extended Fund Facility(EFF) to Sri Lanka?
The EFF-supported program aims to 1) restore Sri Lanka’s macroeconomic stability and debt sustainability, 2) mitigate the economic impact on the poor and vulnerable, 3) safeguard financial sector stability and 4) strengthen governance and growth potential.
Sri Lanka’s top three bilateral creditors India, Japan [as a member of the Paris Club group of creditors] and China have played a crucial role in unlocking IMF assistance to the island, by providing financing assurances to the Fund.