The macroeconomic situation in Sri Lanka is showing tentative signs of improvement, with inflation moderating, the exchange rate stabilizing, and the central bank rebuilding reserves buffers, an International Monetary Fund (IMF) mission said on Tuesday.
In a press release, the IMF mission said that despite the above positive factors, the overall macroeconomic and policy environment remains challenging in the South Asian country.
The IMF team said that they welcome Sri Lankan authorities’ ongoing efforts in meeting key commitments under the IMF-supported program.
“Performance under the program will be formally assessed in the context of the first review of the Extended Fund Facility arrangement, which is expected to be undertaken in September 2023,” said the IMF mission.
The mission discussed additional fiscal efforts that will be critical to ensuring successful revenue mobilization with senior Sri Lankan officials, said the IMF mission.
The mission said that they also discussed progress on debt restructuring, highlighting the ongoing discussions with both foreign and domestic creditors.
“Achieving timely restructuring agreements with creditors in line with the program targets by the time of the first review is essential to restoring debt sustainability. Keeping up the reform momentum and ensuring timely implementation of program commitments, including to ensure central bank independence, improve governance, and protect the vulnerable, are key for Sri Lanka to emerge from the economic crisis,” the IMF said.
The IMF mission conducted a staff visit to Colombo from May 11 to May 23 to discuss recent economic developments and implementation of the IMF-supported program.