IMF keeps faith on Sri Lanka's resilience in economic recovery despite shocks

The International Monetary Fund ( IMF) says it has not decided to revise its projected economic growth of 3.5 per cent for Sri Lanka this year as it was too early to assess the economic impact on the country following the recent Easter terror.

Sri Lankan authorities have successfully brought the economic programme back on track, despite setbacks, by advancing fiscal consolidation through a well- targeted 2019 budget, rebuilding reserves, while maintaining a prudent monetary policy under greater exchange rate flexibility, and reviving structural reforms, the IMF said.

Sustaining policy discipline remains critical to strengthen resilience, given still sizable public debt and low external buffers, and support strong and inclusive growth, it said.

IMF Sri Lanka Mission chief Manuela Goretti told journalists during a video conference in Colombo on Thursday that an economic growth of 5 per cent could be expected in the medium term with the gradual improvement of the economy.

She noted t h at the Government has been able to bring the IMF economic reform programme on track this year, following its suspension during the 52-day political impasse.

The country’s tourism sector affected by the April 21 attacks would exert an impact on the macro economy in the country but clear information is needed to assess the damage, she pointed out.

She was of the view that State Owned Enterprises ( SOEs) reforms, medium debt strategy fuel pricing formula, removal of para tariffs and the implementation of tax reforms under the Inland Revenue Act, and the minimising of fiscal slippage would help to mitigate obstacles on economic activity.

Sustaining policy discipline remains critical to strengthen resilience and support strong and inclusive growth, she added.

The extension of Extended Fund Facility ( EFF) arrangement by one additional year with no strings attached will provide a policy anchor to complete Sri Lanka’s economic reform agenda, she emphasised.

Meanwhile the IMF’s Executive Board on Monday completed the Fifth Review of Sri Lanka’s economic performance under the EFF, making available about US$ 164.1 million for disbursement.