IMF says macroeconomic policy reforms bearing fruit in Sri Lanka

The International Monetary Fund (IMF) says macroeconomic policy reforms are starting to bear fruit in Sri Lanka.

Julie Kozack, Director of the IMF Communications Department said that commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system.

“Program performance is strong with most quantitative and structural conditionality for the second review met or implemented with delay, and reforms are still ongoing in some areas. The next steps on the debt restructuring are indeed to conclude negotiations with external commercial creditors and to implement agreements in principle with the official creditors. The domestic debt operations are largely completed. Debt restructuring discussions are continuing,” she told reporters.

She also noted that the authorities have been holding extensive discussions with external official creditors regarding an MOU with the official creditor committee and the final agreements with the Export Import Bank of China.

“Discussions with external bondholders continue with the aim of reaching agreements in principle soon. Negotiations with the China Development bank are also at an advanced stage. There is a strong expectation that agreements with external commercial creditors consistent with program parameters will be reached soon. So overall we assess that there has been sufficiently strong progress on the debt restructuring front,” she said.

On March 21st, IMF staff and the Sri Lankan authorities reached staff-level agreement on economic policies to conclude the second review of the program and also the 2024 Article IV Consultation.

On June 12th, the IMF Executive Board will meet to discuss the second review and the Article IV Consultation. (Colombo Gazette)