October 25, 2024 The International Monetary Fund (IMF) has commended Sri Lanka’s progress in implementing significant economic reforms, whic...
October 25, 2024
The International Monetary Fund (IMF) has commended Sri Lanka’s progress in implementing significant economic reforms, which have led to several hard-won gains, paving the way for the country’s economic stabilization. The IMF is now looking forward to advancing discussions with Sri Lanka’s new government to ensure that these gains are sustained and built upon, as the country prepares for the upcoming third review of its economic program.
At a recent briefing, Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, lauded Sri Lanka's achievements since its economic crisis in 2022. According to Srinivasan, the country, once on the brink of collapse, has made remarkable strides. "Sri Lanka, which was tearing at the abyss in 2022, has come a long way in terms of undertaking reforms, which have led to some hard-won gains. Growth has been positive in the last four quarters, and inflation is coming down," he highlighted. The recent discussions with Sri Lanka’s new administration have been productive, he said, underscoring a “unanimous consensus” that the government intends to preserve and enhance these gains.
Building on Progress and Addressing Social Protection
The IMF’s program, designed to support Sri Lanka’s recovery, includes elements that align with the priorities of the new administration. Among these is an emphasis on bolstering social protection for vulnerable populations, an issue that has become increasingly important as the government works to balance economic reforms with social stability.
Discussions are ongoing, with talks taking place at the Annual IMF and World Bank meetings in Washington, D.C. Srinivasan expressed optimism about the pace of the program's progress, stating, “We are encouraged by what we have heard so far and are hoping that we can move fast towards the third review which will come up soon.”
Advancements in Debt Restructuring
On the topic of debt restructuring, Srinivasan highlighted that Sri Lanka has made significant headway, having reached agreements with official creditors and provisional agreements with private creditors. “The next step would be to reach a formal agreement with all creditors, and that's a big step forward,” he remarked. However, he acknowledged that achieving a stable economic recovery will require continued efforts and reforms.
Tackling Tax Reforms and Targeted Measures
While specific details regarding tax reforms were not disclosed, Srinivasan indicated that these discussions are active and ongoing. “I don't want to go into the detail because those are things being worked out in the context of discussions which are ongoing right now,” he explained, hinting that more targeted approaches could be expected in the coming weeks.
A Path Toward a Resilient Future
As Sri Lanka embarks on the next phase of its economic recovery, the focus will remain on sustaining and expanding upon the hard-earned gains of recent years. While much work remains to be done, both the IMF and Sri Lanka's government have shown a commitment to steering the country towards a strong, sustainable economic future.
With the third review fast approaching, the IMF's continued support and Sri Lanka’s resilience signal a brighter outlook for a nation that has demonstrated its capacity for substantial economic reform and progress.
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