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IMF-OP ED: Sri Lanka's Economic Reform Program is Starting to Work—Keep ...
News By Krishna Srinivasan and Peter Breuer Sri Lanka is emerging from an unprecedented economic crisis that imposed significant hardships on its people, especially the most vulnerable. We saw some of these effects in our own travels around the country, as well as some signs of recovery, as we work to help rebalance the economy. The economy grew 1.6 percent from a year earlier in the third quarter of 2023, the first expansion in a year and a half. Inflation has moderated significantly and other economic indicators, such as those for manufacturing and services, add to signs of a broadening recovery. We recently projected that the economy will expand this year and that growth will accelerate next year. Sri Lanka turned to the IMF to contain the 2022 crisis and build a foundation for sustainable and inclusive growth. Together, the country and the IMF agreed on a comprehensive economic reform program to address the causes of the crisis and look after those hurt most by the crisis. Addressing a crisis of this depth requires commitment and strong collective efforts by everyone. An essential part of this effort is restoring government revenue to sustainable levels, more in line with Sri Lanka’s past (Chart 1) and peers (Chart 2). Raising revenue is key to narrowing the gap with expenditures, to attracting partners willing to finance essential services, and to creating space to restart economic growth by bringing down inflation and interest rates. This, in turn, will attract investment, further boosting growth. More work is needed to restore tax revenue to a sustainable level and to prevent the 2022 crisis from repeating itself. Sri Lanka will need to resolutely implement reforms to help achieve a complete recovery. IMF financing has helped avoid more severe outcomes, as we witnessed in 2022 before the IMF program when government spending was more than twice its revenue. With spending on health, education, and other essential services at risk of large cuts, and no access to foreign financing, the government borrowed on domestic markets and from the central bank. That raised domestic interest rates and fueled rapid inflation, curbing lending and growth. IMF financing provides time for reforms to work, catalyzes additional financing from other multilateral and bilateral partners, and is expected to assure creditors that debt repayment capacity can be restored and that the reforms merit debt relief. As the country addresses some of the main causes of the crisi...
Daily Mirror - Sri Lanka Latest Breaking News and Headlines
Dailymirror.lk- Sri Lanka 24 Hours Online Breaking News : News, Politics, Video, Finance, Business, Sports, Entertainment, Travel,breaking news, political news
Resident Representative Office in Sri Lanka - IMF
This web page presents information about the work of the IMF in Sri Lanka, including the activities of the IMF Resident Representative Office. Additional information can be found on the Sri Lanka and IMF country page, including IMF reports and Executive Board documents that deal with Sri Lanka.
Sri Lanka news, Sri Lanka economy, Sri Lanka rupee from EconomyNext.
Stability, reform key to positioning Sri Lanka as regional hub: Economist Advocated for reforms to pivot from a cyclical recovery
