## Sri Lanka: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka

_IMF Staff Country Reports, March 25, 2022_

## Source details

**Canonical URL:** [Sri Lanka: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka](https://www.imf.org/en/publications/cr/issues/2022/03/25/sri-lanka-2021-article-iv-consultation-press-release-staff-report-and-statement-by-the-515737)

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## Bibliographic details
- Published: March 25, 2022
- Series: IMF Staff Country Reports

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### Key findings: macroeconomic impact of COVID-19 and policy developments
- COVID-19 severely hit the economy, causing a loss of tourism receipts and necessitating several strict lockdowns.
- Pre-pandemic tax cuts and the impact of COVID-19 led to fiscal deficits larger than 10 percent of GDP in 2020 and 2021.
- Public debt increased rapidly to 119 percent of GDP in 2021.
- Sri Lanka’s access to international capital markets was lost in 2020.
- International reserves declined to critically low levels.
- There was large-scale direct lending to the government by the Central Bank of Sri Lanka (CBSL).
- External debt repayments and a widening current account deficit have led to foreign exchange (FX) shortages.
- The official exchange rate has been de facto fixed since April 2021.
- Inflation is on the rise, reaching double digits in December 2021, reflecting imported inflation, supply shocks, and a pickup in domestic demand amid loose monetary policy.

### Thematic tags and subjects
- Subject: COVID-19, Fiscal consolidation, Fiscal policy, Foreign exchange, Health, International organization, Monetary policy, Public debt, Revenue administration
- Keywords: CBSL Monetary Law Act, COVID-19, Fiscal consolidation, Global, government financing, government intervention, liability positions vis-à-vis nonresident, Sri Lankan authorities

*International Monetary Fund. Sri Lanka: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka (Country Report No. 2022/091), March 25, 2022.*

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_Source: https://www.imf.org/en/publications/cr/issues/2022/03/25/sri-lanka-2021-article-iv-consultation-press-release-staff-report-and-statement-by-the-515737_