IMF team gives prognosis for Lanka at conclusion of nearly two-week visit

Upon completion of its mission to Sri Lanka, the International Monetary Fund (IMF) review team has said that maintaining the economic reform momentum and ensuring timely implementation of the IMF-supported programme’s commitments are essential for Sri Lanka to emerge from the current economic crisis.

The mission discussed recent economic developments and the implementation of the IMF-supported programme including additional fiscal efforts that will be critical to ensure successful revenue mobilization for Sri Lanka, and the debt restructuring process, not excluding the ongoing discussions with both foreign and domestic creditors.

Issuing a statement, the IMF team said, “Achieving timely restructuring agreements with creditors, in line with the programme targets by the time of the first review, is essential to restoring debt sustainability. Keeping up the reform momentum and ensuring timely implementation of programme commitments, including to ensure central bank independence, improve governance, and protect the vulnerable, are key for Sri Lanka to emerge from the economic crisis”.

An IMF mission, led by Peter Breuer and Masahiro Nozaki, conducted a staff visit to Colombo from 11 to 23 May.

Accordingly, while recent macroeconomic and financial sector developments were discussed during the meeting, the staff team recognised that following strong policy efforts, the macroeconomic situation in Sri Lanka is showing tentative signs of improvement, with inflation moderating, the exchange rate stabilizing, and the Central Bank rebuilding reserves buffers.

Despite these advancements, however, they highlighted that the overall macroeconomic and policy environment remains challenging.

“We welcome the authorities’ ongoing efforts in meeting key commitments under the Fund supported programme. Performance under the programme will be formally assessed in the context of the first review of the Extended Fund Facility arrangement, which is expected to be undertaken in September 2023”, the statement further read.

During their visit, the IMF staff team met with President and Minister of Finance Ranil Wickremesinghe, CB Governor Weerasinghe, Secretary to the Treasury Siriwardana, senior government officials, members of the opposition parties, CSOs, think tanks, trade unions, the private sector, and development partners.

“We would like to thank the authorities for the open and collaborative discussions and look forward to our continued close engagement”, the statement concluded.