On October 25, 2024, the International Monetary Fund (IMF) acknowledged Sri Lanka’s significant progress in implementing economic reforms that have contributed to stabilizing the country’s economy. As Sri Lanka prepares for the third review of its economic program, the IMF has expressed optimism about sustaining these achievements through continued efforts and collaboration with the nation’s new government.
Highlights of Economic Recovery
Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, praised Sri Lanka’s accomplishments since the economic crisis of 2022. He noted the country's positive growth over the past year and a steady decline in inflation, reflecting the success of ongoing reforms. During a recent briefing, Srinivasan described Sri Lanka’s journey as remarkable, transitioning from a period of severe economic challenges to one of stability and recovery.
He further emphasized the productive discussions with Sri Lanka’s leadership, which have shown a unified commitment to building on these gains and advancing reforms.
Social Protection and Policy Priorities
The IMF has tailored its program to support Sri Lanka’s recovery while prioritizing social protection for vulnerable populations. This focus has become a key aspect of the government's approach to balancing economic stability with the well-being of its citizens. Ongoing discussions at the IMF and World Bank annual meetings in Washington, D.C., highlight the importance of addressing these social challenges while sustaining economic progress.
Srinivasan expressed confidence in the program’s progress and its alignment with the government’s priorities. He noted that all parties are working toward a fast resolution in preparation for the upcoming third review of the program.
Advances in Debt Restructuring
Sri Lanka has made substantial progress in its efforts to restructure debt, with agreements reached with official creditors and provisional arrangements with private creditors. Srinivasan acknowledged these achievements as crucial milestones in the nation’s recovery journey. The next steps involve finalizing formal agreements with all creditors, which will be a significant accomplishment in securing long-term economic stability.
Tax Reforms and Future Discussions
Tax reform discussions remain ongoing, with efforts aimed at ensuring equitable and efficient measures to support the economy. While specific details have not yet been disclosed, the IMF anticipates targeted approaches to address fiscal challenges. The results of these discussions are expected to shape policy decisions in the coming weeks.
A Resilient Path Forward
Sri Lanka’s economic recovery demonstrates the nation’s resilience and commitment to reform. The focus now shifts to sustaining these hard-won gains and building a stable foundation for future growth. The IMF remains a supportive partner in this journey, offering expertise and collaboration as Sri Lanka navigates the challenges of economic transformation.
With the third review approaching, both the IMF and Sri Lanka’s government are working diligently to ensure a strong, sustainable future for the nation.
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