IMF Staff Concludes Visit to Sri Lanka

IMF News, January 19, 2024

Source details

Press Release No. 24/14 dated January 19, 2024.
IMF mission led by Mr. Peter Breuer visited Sri Lanka from January 11 to 19, 2024.
End-of-Mission press release; views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
Progress in meeting key commitments under the IMF-supported program will be formally assessed in the context of the second review of the Extended Fund Facility (EFF) arrangement alongside the forthcoming 2024 Article IV consultation.

Real GDP recorded positive growth of 1.6 percent year-on-year in the third quarter of 2023, the first expansion in six consecutive quarters.
Gross international reserves increased by USD 2.5 billion during 2023.
Shortages of essentials have eased.
Inflation remains contained.
Preliminary data point to improved fiscal revenue collections during the fourth quarter of 2023.

Sustain the reform momentum and ensure timely implementation of all program commitments to rebuild confidence and put recovery on a firm footing that will benefit all people.
Introduce a progressive property tax swiftly to ensure fair burden sharing while sustaining revenue-based consolidation.
Accompany tax policy measures with:
- Strengthening tax administration.
- Removing tax exemptions.
- Actively eliminating tax evasion.
Future monetary policy decisions should remain prudent with a focus on keeping inflation expectations well anchored.
Continue rebuilding external buffers through strong reserve accumulation given continued uncertainty.
Protect the poor and the vulnerable through improved targeting and better coverage of cash transfers.

Urgent finalization of amendments to the Banking Act in line with commitments under the IMF-supported program.
Implement the bank recapitalization plan.
Strengthen the financial supervision and crisis management framework to safeguard financial sector stability and bolster its capacity to support economic growth.
Following the IMF Governance Diagnostic report publication, authorities should adopt their own action plan for implementing the report’s recommendations beyond priority commitments under the EFF arrangement.
Ensure an enabling environment for governance and transparency reforms to bolster public confidence and facilitate implementation.

Execution of the domestic debt restructuring was an important milestone.
A swift completion of final agreements with official creditors and reaching a resolution with external private creditors remain critical to fully restoring debt sustainability.

IMF team met with President and Finance Minister Ranil Wickremesinghe; Central Bank of Sri Lanka (CBSL) Governor Dr. P. Nandalal Weerasinghe; Speaker Mr. Mahinda Yapa Abeywardana; Minister Mr. Kanchana Wijesekera; Minister Mr. Wijeyadasa Rajapakse; State Minister Mr. Shehan Semasinghe; Secretary to the Treasury Mr. K M Mahinda Siriwardana; Governor of Northern Province Mrs. P.S.M.Charles; Governor of Eastern Province Senthil Thondaman; and other senior government and CBSL officials.
The IMF team also met with Parliamentarians, representatives from the private sector, civil society organizations, and development partners.
The mission included a visit to the Northern and Eastern provinces, which enriched the mission team’s understanding of challenges and potential in Sri Lanka.
IMF Communications Department media relations contact: PRESS OFFICER: Huong Lan ‘Pinky’ Vu. Phone: +1 202 623-7100 Email: MEDIA@IMF.org @IMFSpokesperson

Source: IMF Staff Concludes Visit to Sri Lanka (Press Release No. 24/14, January 19, 2024).