IMF commends SL’s progress achieved thus far

The International Monetary Fund (IMF) this week commended the progress achieved by Sri Lanka thus far in rolling out the economic reforms, the majority of which have been rather painful to the general public.

The Fund noted that the outcomes of the efforts taken to bring the economy on track are now evident as key indicators are showing improvements.

“With respect to Sri Lanka’s economic performance, Macroeconomic policies in Sri Lanka are starting to bear fruit. Commendable outcomes include a rapid decline in inflation, robust reserve accumulation, and initial signs of economic growth, while also preserving stability in the financial system,” said IMF Director of Communications Julie Kozack speaking to journalists in Washington D.C. yesterday.

“Overall, programme performance has been strong,” she added.

Kozack pointed out, as reiterated by several IMF officials in the recent weeks, the next steps with respect to the debt restructuring, are to conclude negotiations with external private creditors and to implement the agreements in principle with Sri Lanka’s official creditors. 
The domestic debt operations are largely completed. 

“The initial debt restructuring negotiations with external bondholders ended in mid-April without an agreement and discussions are continuing with a view to reaching agreement in principle. And on the official creditors side, these agreements in principle still need to be finalided,” said Kozack.

In April, IMF Director Asia and Pacific Department Krishna Srinivasan noted that while all seems on track for Sri Lanka, more work is needed.

“I don’t want to jinx it because the road ahead is going to be harder but there is progress being made and both in terms of growth,” he reiterated.

According to the IMF, Sri Lanka needs to do more in its fiscal policy, in terms of building reserves and becoming resilient. 

IMF staff and Sri Lankan authorities have reached staff-level agreement on economic policies to conclude the second review of the four-year Extended Fund Facility (EFF) supported programmr and the 2024 Article IV Consultation. 

Once the review is approved by the IMF management and completed by the IMF Executive Board, Sri Lanka will have access to about US$ 337 million in financing.