IMF praises Sri Lanka's economic progress, urges continued reforms
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The International Monetary Fund (IMF) has commended Sri Lanka for its economic progress, noting a rebound in GDP growth and a decline in inflation. However, the global lender has emphasised the need for sustained reforms to ensure long-term stability.
An IMF mission led by Senior Mission Chief Peter Breuer visited Sri Lanka from July 25 to August 2, 2024, to review the country's economic reform programme supported by the IMF’s Extended Fund Facility (EFF), according to a media statement Friday.
At the conclusion of the visit today (Friday), Breuer highlighted positive developments in Sri Lanka's economy. He noted that real GDP has grown for three consecutive quarters, with a 5.3 per cent year-on-year increase in Q1 2024. Inflation remains under the Central Bank of Sri Lanka’s (CBSL) 5 per cent target, domestic borrowing rates have decreased, and gross international reserves increased by $1.2 billion to $5.6 billion during the first half of 2024.
Despite these gains, Breuer emphasised the need for continued reform to ensure economic stability and improve living conditions. Key recommendations include maintaining fiscal discipline, increasing revenue through the 2025 Budget, and avoiding new tax exemptions to reduce corruption risks.
He also stressed the importance of continuing energy price adjustments, protecting the vulnerable, and implementing governance reforms.
Recent legislative approvals, including the Public Financial Management Act and the Public Debt Management Act, were acknowledged as significant steps towards better fiscal discipline and debt management. Additionally, the IMF welcomed amendments to the Banking Act and the National Anti-corruption Agenda.
The next review of the EFF programme will be scheduled after the upcoming presidential elections.
The IMF mission met with top government officials, including President and Finance Minister Ranil Wickremesinghe, Central Bank Governor Dr P Nandalal Weerasinghe, and other key stakeholders.