State Minister of Finance Shehan Semasinghe last week reiterated the need for considerable intervention by the International Monetary Fund (IMF) and other multilateral lending organisations, when engaging with small economies like Sri Lanka. 

He made this observation while virtually participating in the Voice of Global South Summit 2023 of the G20 hosted by latter’s chair India.

The State Minister said that the IMF bailout package, which is under negotiation, has made significant progress with the signing of the staff level agreement.

While explaining the measures taken for the economic stabilisation of the country, the State Minister emphasised how inadequate forex in the country has caused a slew of problems, including shortages of basic food items, fuel, and building materials.

He further said, “However, the delay to reach quick agreements with bilateral lenders has delayed the IMF Executive Board’s approval and the disbursement of funds. The discussions are undergoing, and such technical issues and delays are taking a heavy toll on the lives of the country’s people. Therefore, we expect, through mutual understanding, the final step in this process would take place soon.”

Semasinghe said with the onset of the critical situation, Sri Lanka has initiated a number of financial and fiscal sector reforms to assure a quick economic recovery while promising that there is no economic crisis in the future.

“To protect the poor and vulnerable from the effects of the economic crisis, social safety nets are being strengthened. Structural reforms are being made to improve the transparency and economic viability. Through this, exchange rate flexibility would be increased, along with the rebuilding of international reserves and the strengthening of the institutional framework supporting flexible inflation targeting and greater exchange rate flexibility,” State Minister Semasinghe added. 

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