Despite initial setbacks in discussions between the Government of Sri Lanka and the private bondholders, the IMF expressed “hope that there will be conclusions reached upon down the road”.
Krishna Srinivasan, Director of the Asia and Pacific Department (APD) at the International Monetary Fund (IMF) said the four-year Extended Fund Facility (EFF) programme that Sri Lanka embarked upon with the IMF which was ambitious and much needed is now delivering progressive results.
Early signs of economic recovery by Sri Lanka have been observed by the IMF, its APD Director said during the IMF press conference on the Regional Economic Outlook for Asia and Pacific which was held in Washington DC, USA, on Thursday, April 18.
Highlighting evidence of economic progress in Sri Lanka, Srinivasan said that the country’s real GDP has expanded by 3 percent year-on-year in the second half of 2023, inflation has come down from a peak of 70 percent in September 2022 to 0.9 percent in March 2024 with Gross Official Foreign Reserves having increased by US$ 2.5 billion in 2023 and the primary balance has reached a surplus of 0.6 percent of Gross Domestic Product (GDP) in 2023.
Srinivasan said that the road ahead for Sri Lanka’s full economic recovery is going to be harder, but there is progress being made both in terms of economic growth and inflation.
He said that the debt restructuring negotiations recommended by the IMF are progressing well, where there is good progress with the official creditors which is quite encouraging to note.
Speaking about the debt restructuring negotiations with the private sector creditors by the Sri Lankan Government, Srinivasan pointed out that discussions are ongoing and the IMF believes that there will be conclusions reached upon down the road.
The IMF APD Director emphasized that the EFF programme that Sri Lanka embarked upon with the IMF is delivering on what it is expected to do, economic growth is picking up, inflation is coming down and financial reserves are going up even though the road ahead to full recovery is difficult and therefore, Sri Lanka has to keep pursuing with the reforms recommended by the IMF both on the fiscal side and in terms of structural reforms, including on governance and reducing corruption which are areas that are very important.
Varuna Dayaratne