Sri Lanka’s “next big step” is creditor agreement: IMF

The International Monetary Fund (IMF) has acknowledged that Sri Lanka has made significant progress in implementing reforms but emphasised that the “next big step forward” is for the island nation to reach a formal agreement with all creditors.

Speaking at a press conference in Washington, D.C., IMF Asia and Pacific Department Director Krishna Srinivasan highlighted that Sri Lanka still faces substantial challenges.

“… And of course, that’s not the end. There’s a lot more work to be done in terms of continuing with the reforms because a long way to go before you’re on the path of strong and sustainable recovery,” Srinivasan said.

Srinivasan noted that there is consensus within the new government to preserve and build on the hard-won gains achieved under the programme.

The IMF stated that the programme includes elements aligned with the new government’s priorities, particularly regarding social protection.

“The details on the programme are continuing and they’ll be happening this week in Washington. And we are encouraged by what we have heard so far and hoping that, you know, we can move fast towards the third review, which will come up soon,” he said.

“We had some very, very productive discussions with the new government and the team there. And the discussions are continuing this week during the Annual Meetings.”

Engaged in the discussions with the IMF in Washington, D.C. are Central Bank Governor Dr. Nandalal Weerasinghe, Finance Ministry Secretary Mahinda Siriwardana and Senior Economic Advisor to President Duminda Hulangamuwa.

Responding to a question about macro-linked bonds, Srinivasan expressed concerns about whether these instruments and the restructuring approach align with the programme targets on debt.

“There’s comparability of treatment across creditors. So, that’s something which the country works on,” he said.

On tax measures, Srinivasan refrained from specifics, noting that these issues are being addressed in the ongoing discussions.

“Hopefully, you know, we’ll move along these negotiations over the next few weeks in a more targeted way,” Srinivasan said.