Sri Lanka's reforms led to growth, low inflation, more revenues: IMF

Growth accelerated to 5.3 per cent year on year (YoY) in the first quarter (Q1) this year. Inflation remains contained below the Central Bank of Sri Lanka’s (CBSL) 5-per cent target and domestic borrowing rates have declined.

Gross international reserves increased by $1.2 billion during the first half of 2024 and reached $5.6 billion.

Decisive progress on the reform agenda is necessary to ensure a broad-based and stable economic recovery benefitting the masses, IMF said after its mission recently concluded its visit to the country to discuss macroeconomic developments and progress in implementing economic and financial policies under the authorities’ economic reform programme backed by the IMF’s Extended Fund Facility (EFF) arrangement.

“With Sri Lanka’s knife-edged recovery at a critical juncture, sustaining the reform momentum and ensuring timely implementation of all programme commitments are critical to cement the hard-won economic progress to date and put the economy on a firm footing,” Senior mission chief Peter Breuer said in an IMF release.

Maintaining macroeconomic stability and restoring debt sustainability require further efforts to raise fiscal revenues, IMF noted.

The 2025 Budget needs to be underpinned by appropriate revenue measures and continued spending restraint so as to reach the medium-term primary balance objective of 2.3 per cent of GDP—a key requirement for restoring Sri Lanka’s debt sustainability, it said.

Fibre2Fashion News Desk (DS)