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IMF Optimistic about Sri Lanka’s Economic Progress, Foresees Continued Recovery

April 24, Colombo (LNW): Despite initial challenges in discussions between the Government of Sri Lanka and private bondholders, the International Monetary Fund (IMF) remains hopeful for positive outcomes in the future.

Krishna Srinivasan, Director of the Asia and Pacific Department (APD) at the IMF, expressed satisfaction with Sri Lanka’s progress under the four-year Extended Fund Facility (EFF) programme. Srinivasan highlighted that Sri Lanka’s economic recovery efforts are yielding promising results, as evidenced by several key indicators.

During the IMF press conference on the Regional Economic Outlook for Asia and Pacific in Washington DC, held on Thursday, April 18, Srinivasan noted early signs of economic recovery in Sri Lanka. He cited a 3 percent year-on-year expansion of real GDP in the second half of 2023, a significant decrease in inflation from a peak of 70 percent in September 2022 to 0.9 percent in March 2024, and an increase of US$ 2.5 billion in Gross Official Foreign Reserves in 2023. Additionally, Sri Lanka achieved a surplus of 0.6 percent of Gross Domestic Product (GDP) in its primary balance in 2023.

While acknowledging the challenges ahead for Sri Lanka’s full economic recovery, Srinivasan expressed optimism about the progress being made in terms of economic growth and inflation. He highlighted the ongoing debt restructuring negotiations, commending the positive strides made with official creditors and expressing confidence in reaching agreements with private sector creditors in due course.

Regarding the debt restructuring discussions with private sector creditors, Srinivasan emphasized that negotiations are ongoing, with the IMF anticipating favorable outcomes in the future.

Srinivasan reaffirmed the importance of Sri Lanka’s commitment to IMF-recommended reforms, particularly in fiscal management and structural adjustments. He underscored the significance of addressing governance issues and reducing corruption as integral components of Sri Lanka’s reform agenda for sustained economic recovery.

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