The International Monetary Fund (IMF) has stressed the urgent need for Sri Lanka to diversify its export markets and foster an investment-conducive environment, particularly amid uncertainties stemming from recent tariff adjustments.
Speaking at the 2025 Spring Meetings of the World Bank Group and the IMF, Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, addressed the challenges presented by sudden policy changes during a Regional Economic Outlook – Asia and Pacific session held on April 24.
Referring to the recent tariff modifications introduced by the Sri Lankan government, Srinivasan noted that such changes have complicated economic forecasting and programme implementation. “It became quite difficult to put together a macro framework,” he stated, citing the impact on exports, growth, and investor confidence.
Highlighting the vulnerability of key sectors such as apparel, Srinivasan warned that excessive tariffs could significantly hamper competitiveness. “This is a country affected by high tariffs… the garment sector could see notable impacts,” he said, adding that regional integration and export market diversification are vital to mitigating external risks.
On the investment front, Srinivasan urged the Sri Lankan government to support private sector growth without compromising fiscal stability. “Promote investment not through tax exemptions, but by creating an environment where domestic private investment can thrive,” he advised.
The IMF also acknowledged the progress achieved under Sri Lanka’s ongoing programme, particularly regarding macroeconomic stabilization, reduced inflation, and modest growth recovery. Srinivasan concluded that the current environment presents an opportunity to undertake broader structural reforms to sustain long-term growth and resilience.
