LNP – Sri Lanka’s economy still vulnerable, sustaining reform momentum critical – IMF

The International Monetary Fund (IMF) says that the economic recovery is gaining momentum in Sri Lanka and that yet, the economy still remains vulnerable, making it critical that the reform momentum be sustained to ensure that macroeconomic stability and debt sustainability are durably achieved.Â

Speaking during the IMF’s weekly press briefing, IMF Spokesperson Julie Kozack stated that the fourth tranche of $334 million was made available to Sri Lanka to support its economic policies and reforms, immediately after the Executive Board approved the Third Review.

“On Friday, February 28th, the IMF Executive Board approved the Third Review under the EFF (Extended Fund Facility) arrangement for Sri Lanka. And this provided the country with immediate access to $334 million of support.”

“So, yes, once the Board approved that Third Review, the $334 million was made available to Sri Lanka to support its economic policies and reforms.  And with this $334 million, it brings total financial support from the IMF to Sri Lanka to $1.34 billion”, Kozack confirmed.

Furthermore, the IMF Spokesperson said that reforms in Sri Lanka are bearing fruit and that the economic recovery is gaining momentum.

She noted that inflation remains low in Sri Lanka, revenue collection on the fiscal side is improving, and international reserves are continuing to accumulate.

Economic growth reached 5 percent in 2024, and that was after two years of economic contraction, she added, highlighting that the IMF do expect the recovery to continue in 2025 in Sri Lanka. Â

“These are all very positive developments for Sri Lanka and for the people of Sri Lanka”, Kozack expressed.

Meanwhile, the IMF Spokesperson also mentioned: “All of this said, the economy still does remain vulnerable, and therefore it is critical that the reform momentum be sustained to ensure that macroeconomic stability and debt sustainability are durably achieved.”

In response to a question raised by a journalist on the IMF’s take on the proposal to list Sri Lanka’s State-Owned Enterprises (SOEs) in the Colombo Stock Exchange given that the program also calls for extensive reforms in SEOs, Kozack denied a comment, stating, “I don’t have anything for you on that regarding the SOEs, but we’ll come back to you bilaterally.”