In his statement, the governor claimed that the Extended Fund Facility (EFF), which has a longer repayment period and requires structural reform, is best suited for Sri Lanka.
To evaluate the suitability of an EFF, FactCheck.lk consulted fact sheets on lending arrangements released by the International Monetary Fund (IMF) and the history of lending arrangements in Sri Lanka.
The suitability of the EFF was evaluated based on two main criteria: (1) the repayment period of a facility, (2) the quantity of funds obtained from a facility.
Evaluation of criteria 1: Exhibit 1 shows the eight lending facilities offered by the IMF. The EFF has a repayment period second only to the External Credit Facility (ECF), for which Sri Lanka is not eligible.
Evaluation of criteria 2: In comparison to the average funding obtained for all programmes Sri Lanka has had with the IMF, the EFF obtained the largest average funding worth of SDR 416.97 million.
Based on the evaluation of the above two criteria and the constraint of eligibility, the EFF provides the largest quantum of funds on the most concessional repayment period—making it best suited for the country.
Therefore, we classify the governor’s statement as TRUE.
NB: The EFF allows up to 145% of a country’s quota to be accessed annually. Based on Sri Lanka’s quota of SDR 578.8 million Sri Lanka can receive SDR 839.26 million (approx. USD 1.1 billion) annually via an EFF. However, in the context of unsustainable debt and restructuring challenges, Sri Lankan may even require assistance that goes beyond the standard facilities available from the IMF.
*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.
Exhibit 1 – Facilities Provided by the IMF [Figures in SDR millions]
Source: International Monetary Fund Factsheet on Lending
1.Although the ECF has a longer repayment period, it is restricted to Poverty Reduction and Growth Trust (PRGT) for eligible members (i.e., countries in the low-income bracket ). Sri Lanka graduated from PRGT status in 2010, thereby is not eligible for this facility.
2.Given Sri Lanka’s current state of insolvency the largest quantity of funds will help address the acute liquidity issues and satisfy urgent Balance of Payment needs. The longer repayment period will provide a greater breathing space for the economy to implement policy changes and structural reforms as stipulated in the conditionality of an EFF.
International Monetary Fund Factsheet on Lending available at https://www.imf.org/en/About/Factsheets/IMF-Lending [ last accessed on 29.04.2022]
Sri Lanka: History of Lending Commitments as of September 30 2018, available at
https://www.imf.org/external/np/fin/tad/extarr2.aspx?memberKey1=895&date1key=2018-09-30 [ last accessed on 29.04.2022]