An IMF delegation warned at a press conference in Colombo that despite initial indications of stabilisation, a full economic recovery is not yet guaranteed and that maintaining the reform momentum is essential to put Sri Lanka’s economy on a path towards long-term recovery and stable growth.
From September 14 to September 27, 2023, a mission team from the International Monetary Fund (IMF) led by Mr. Peter Breuer and Ms. Katsiaryna Svirydzenka was in Colombo to talk about economic and financial policies that would support the approval of the First Review of the programme under the Extended Fund Facility (EFF) arrangement.
The IMF Communications Department said in a statement released as the visit came to an end on Wednesday (27), “There, the IMF team had constructive and productive discussions with the Sri Lankan authorities on economic performance and policies underpinning the first review under the IMF Extended Fund Facility (EFF) arrangement.”
After the meeting, Mr. Breuer and Ms. Svirydzenka released a statement stating that the Sri Lankan people have demonstrated great fortitude and that the government has made considerable strides on crucial reforms.
In the near future, discussions will continue in an effort to obtain a staff-level agreement that will preserve the reform momentum required for Sri Lanka to recover from its severe economic crisis.
The Sri Lankan people have demonstrated incredible resiliency in the face of significant obstacles. Sri Lanka has accomplished considerably in the implementation of challenging but essential reforms. These efforts are paying off since the economy is beginning to stabilise a little bit. Gross international reserves rose by $1.5 billion between March and June of this year, and shortages of necessities have subsided. Inflation has decreased from a peak of 70% in September 2022 to below 2% in September 2023.
Early stabilisation indicators aside, a comprehensive economic recovery is not yet certain. With real GDP declining by 3.1% in Q2 on an annual basis and high-frequency economic indicators continuing to send conflicting signals, growth momentum is still weak. The growth of reserves has slowed recently.
