IMF says economic recovery remains challenging

A visiting senior official from International Monetary Forum (IMF) said that Sri Lanka’s economy is showing tentative signs of improvement, in part due to the implementation of critical policy actions but cautioned that the economic recovery remains challenging. 

"Now, more than ever, it is essential to continue the reform momentum under strong ownership by both the authorities and the Sri Lankan people," Kenji Okamura, Deputy Managing Director of IMF said today in Colombo at the conclusion of his visit to Sri Lanka.

His visit came in the wake of approval given by the IMF Executive Board of 48-Month arrangements of about US$ 3 billion under the Extended Fund Facility (EFF) with Sri Lanka

I welcomed the authorities’ strong commitment to implement their ambitious economic program which is supported by the IMF. The economic reform program aims to achieve macroeconomic stabilization, restore debt sustainability, safeguard financial stability, strengthen governance, and protect the vulnerable, the Deputy Managing Director was quoted as saying in an official statement issued on the visit. 

During the visit, the Deputy Director met with President and Minister of Finance Wickremesinghe, Governor Weerasinghe, Speaker Abeywardhana, Minister of Foreign Affairs Sabry, Minister of Justice Rajapakshe, State Minister of Finance Semasinghe, State Minister of Investment Promotion Amunugama, Secretary to the Treasury Siriwardana, and senior government officials for their hospitality, and parliamentarians and representatives of the private sector as well. 

“The current economic crisis has its genesis in policy missteps aggravated by external shocks. We discussed the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability. I was encouraged by the authorities’ commitment to negotiate a debt strategy in a timely and transparent manner," Deputy Director Okamura said while stressing that continued open dialogue with the creditors will help to reach restructuring agreements to restore debt sustainability in line with the program targets. Undoubtedly, safeguarding the stability of the financial sector is of utmost importance in this process.

He also stressed the importance of protecting the poor and the most vulnerable that have been disproportionately affected by the crisis. "I was heartened to see that the authorities have stepped up efforts to increase public spending on social safety nets while improving targeting and coverage for those who need it,"