IMF Commends Sri Lanka’s Reform Progress in Recent Presidential Meeting
January 13, Colombo (LNW): In a high-profile meeting on Thursday (11), President Ranil Wickremesinghe and Sri Lankan authorities engaged with the International Monetary Fund (IMF), where congratulations were extended to the nation for successfully completing the first review under the IMF program.
The IMF acknowledged the positive initiation of the program, praising Sri Lanka for undertaking challenging reforms that have had a significant impact on the domestic population. Directors at the executive board meeting specifically lauded Sri Lanka’s courage in pioneering the publication of a governance diagnostic—an unprecedented effort in Asia.
Peter Breuer, the Senior Mission Chief for Sri Lanka, shared encouraging observations regarding the program’s effects on stabilizing the economy, particularly in policy-oriented variables and fiscal areas. A recent meeting highlighted promising revenue collection, demonstrating the effectiveness of implemented policies since the staff level agreement in the second half of 2022. The IMF underscored the positive surprise in these developments, fostering confidence with the international community, official creditors, and private creditors.
Breuer conveyed to President Wickremesinghe, “With respect to revenue collection, in fact, we had a meeting that showed very encouraging numbers that basically highlight that the policies you implemented beginning from after we reached the staff level agreement in the second half of 2022 are working, that they have the intended effect, that you’re collecting the revenue that’s needed to address the cause of the crisis. So, that really is very good news.”
The board meeting acknowledged Sri Lanka’s success in significantly reducing inflation, attributing it to government efforts in monetary policy and the reduction of monetary financing. Positive outcomes, including an increase in reserves, were noted. Ongoing governance reforms were seen as positive indicators contributing to tentative economic growth in the third quarter, particularly in capital formation and machinery.
As the IMF prepares for its upcoming formal review and Article 4 consultation, key areas of focus include the new public financial management law, potential conflicts with the public-private partnership law, electricity tariffs, and urgent preparations for property taxation. The IMF stressed the importance of persisting with ongoing reforms, addressing fiscal issues, and advancing governance agendas.
The meeting also emphasized the urgency of addressing fiscal matters, including passing amendments to the Banking Act and recapitalizing the banking sector. On the governance front, discussions revolved around operationalizing the Anti-Corruption Commission, publishing action plans, and meeting with the Constitutional Council for insights into commissioner selection processes.
