The Director of Asia & Pacific Department of the International Monetary Fund (IMF), Krishna Srinivasan, has stated that Sri Lanka can achieve sustainable debt and prosperity by properly implementing the IMF-supported program. Speaking at a press briefing on the Regional Economic Outlook on Asia and Pacific, Srinivasan highlighted that Sri Lanka had a quintessential problem with twin deficits, which put pressure on external accounts and resulted in falling reserves and exchange rates.
To address these challenges, Sri Lanka approached the IMF for a relief program, which was recently approved by the global lender’s Executive Board. The 48-month extended arrangement under the EFF program of SDR 2.286 billion (approximately USD 3 billion) for Sri Lanka opens doors for the country to access financing up to USD 7 billion from the IMF, international financial institutions, and multilateral organizations.
Srinivasan explained that the IMF-supported program is a revenue-based consolidation that provides stability to Sri Lanka’s economy and aims to rein in inflation, which went through the roof. He also emphasized that the program addresses governance and corruption issues in Sri Lanka and has a floor on how the country should support the poor and vulnerable.
Furthermore, Srinivasan noted that Sri Lanka needs to make good faith efforts to reach a debt agreement with its private, official, and other creditors. When restructuring Sri Lanka’s domestic debt, it is essential to safeguard financial stability as debt sustainability remains a significant challenge in the country.
In conclusion, Srinivasan urged Sri Lanka to properly implement the IMF-supported program to achieve sustainable debt and prosperity. The program provides a comprehensive approach to address the country’s economic challenges and supports the poor and vulnerable while tackling governance and corruption issues.
