SL economy still vulnerable despite positive developments – IMF mission chief
Posted on March 5th, 2025
KELUM BANDARA Courtesy The Daily Mirror
Despite positive developments and recovery expected this year, Sri Lanka’s economy is still vulnerable, and it is critical to sustain the reform momentum for long-term growth, a top International Monetary Fund (IMF) official said yesterday.
Addressing a virtual press conference, Senior Mission Chief for Sri Lanka Peter Breuer said that the IMF Executive Board approved the third review under the 48-month Extended Fund Facility Arrangement with Sri Lanka.
It provides the country with immediate access to US $ 334 million to support its economic policies and reforms and brings the total IMF financial support disbursed so far to about U.S. $ 1.3 billion.
The IMF continues to support Sri Lanka’s efforts to restore and maintain macroeconomic stability and debt sustainability, while protecting the poor and vulnerable, rebuilding external buffers, safeguarding financial sector stability, and enhancing growth-oriented structural reforms, including by strengthening governance,” he said.
The IMF Executive Board’s approval to complete the third review recognizes the strong programme performance. All quantitative targets for the end of December 2024 were met, except for the indicative target on social spending. Most structural benchmarks due by the end of January 2025 were either met or implemented with delay, he said.
Commenting on the macroeconomic situation, he said it is encouraging to see that reforms in Sri Lanka are bearing fruit, with economic recovery gaining momentum.
Inflation remains low, revenue collection is improving, and reserves continue to accumulate. Economic growth averaged 4.3 percent since growth resumed in the third quarter of 2023. The recovery is expected to continue in 2025. Despite these positive developments, the economy is still vulnerable. It is critical to sustain the reform momentum, to ensure macroeconomic stability and debt sustainability, and to promote long-term inclusive growth,” he said.
He emphasized that sustained revenue mobilization is crucial to restoring fiscal sustainability and ensuring that the government can continue to provide essential services.