October 16, Colombo (LNW): The International Monetary Fund (IMF) has acknowledged the marked improvement in Sri Lanka’s economic landscape following its recent debt restructuring efforts, noting a gradual return to stability and renewed investor confidence.
However, the institution also cautioned that this momentum must be safeguarded through continued fiscal discipline and structural reform.
Speaking during the launch of the Global Financial Stability Report in Washington D.C., senior IMF officials highlighted Sri Lanka as one of several frontier economies showing signs of recovery after navigating a prolonged period of economic distress.
The country’s return to the path of growth comes as global financial conditions remain relatively favourable, with liquidity levels providing emerging markets with improved access to capital.
Jason Wu, Assistant Director of the IMF’s Monetary and Capital Markets Department, observed that a weakening of the US dollar has helped reduce external pressure on economies such as Sri Lanka. However, he emphasised that this temporary relief should not lead to a false sense of security.
“Frontier economies must use this period to reinforce economic fundamentals—strengthening both their current account positions and fiscal buffers,” Wu noted, reiterating key points from the IMF’s latest World Economic Outlook.
Echoing this sentiment, Tobias Adrian, Director of the IMF’s Monetary and Capital Markets Department, remarked that Sri Lanka is making tangible progress in emerging from its debt crisis. He described the country as being on a “positive trajectory” in terms of economic growth and the restoration of market confidence.
“Market conditions have been relatively accommodative, and many lower-income nations with market access have been able to tap into global liquidity. Sri Lanka is among those now benefiting from that environment,” Adrian said.
Despite the cautiously optimistic tone, the IMF also warned that the current calm across global financial markets may conceal underlying vulnerabilities. Policymakers in recovering economies, including Sri Lanka, are therefore being urged not to lose sight of long-term reforms needed to bolster economic resilience.
As Sri Lanka continues its recovery, international institutions and analysts alike will be closely watching how the government manages this critical phase—balancing macroeconomic stabilisation with the need to address structural weaknesses that contributed to the crisis in the first place.
