IMF acknowledges Sri Lanka’s economic recovery but warns of lingering vulnerabilities

Date:

March 28, Colombo (LNW): The International Monetary Fund (IMF) has acknowledged Sri Lanka’s progress in economic recovery, noting that key indicators suggest a positive shift.

However, the global financial body has also cautioned that the nation’s economy remains fragile, stressing the need for continued reforms to ensure long-term stability and debt sustainability.

During the IMF’s weekly briefing, spokesperson Julie Kozack confirmed that the organisation had released the fourth tranche of financial assistance—amounting to $334 million—immediately after the Executive Board approved the Third Review of Sri Lanka’s Extended Fund Facility (EFF) programme.

This latest disbursement brings the total IMF financial support for the country to $1.34 billion.

Kozack elaborated on Sri Lanka’s economic turnaround, stating, “Reforms are beginning to bear fruit, and economic recovery is gaining momentum. Inflation remains low, fiscal revenue collection is improving, and international reserves are continuing to grow.”

She highlighted that Sri Lanka’s economy registered a growth rate of 5 per cent in 2024, marking a significant rebound after two consecutive years of contraction. The IMF expects this upward trend to continue into 2025, further strengthening the country’s economic outlook.

Whilst acknowledging these positive developments, Kozack warned that Sri Lanka is not out of danger yet. “The economy remains vulnerable, and therefore it is critical that reform momentum is sustained to ensure durable macroeconomic stability and debt sustainability,” she emphasised.

The discussion also touched upon Sri Lanka’s ongoing efforts to restructure state-owned enterprises (SOEs), a key aspect of its economic reform agenda. When asked about proposals to list these enterprises on the Colombo Stock Exchange, Kozack refrained from commenting, stating, “I don’t have anything for you on that regarding the SOEs, but we’ll come back to you bilaterally.”

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