ECONOMYNEXT – Sri Lanka has missed a performance criteria on zero spending arrears including in past reviews by wrongly reporting data, and has requested waivers which have been granted, International Monetary Fund said.
The problem had come to light after senior citizen interest subsidy was published in the Finance Ministry annual report but were not reported to the IMF.
“The authorities reported outstanding liabilities for certain interest subsidy schemes in the Ministry of Finance (MOF) Annual Report that were not previously reported to the Fund,” and IMF staff report said.
“Published audit reports by the Auditor General also identified instances where other liabilities had been accumulated by budgetary units, but these were not reflected in MOF’s data.”
As a result the IMF had ended by disbursing funds under recent review despite missing a quantitative performance criteria (non-complying purchases).
Now the IMF board has given a waivers. The IMF said the mis-reporting was not deliberate but ‘inadvertent’ in part due to delayed reporting by line ministries and also a mis-understanding a definition on arrears in the program.
“Authorities are committed to clearing the identified arrears by the end of the program (March 2027), while still meeting the primary balance target,” the report said.
“The 2025 Budget already includes provisions for arrears clearance and going forward authorities will consult with staff on an arrears clearance strategy.” (Colombo/July04/2025)