Sri Lanka can be on path to recovery by 2024: IMF official

International Monetary Fund Director Asia and Pacific Department Krishna Srinivasan addresses the media on the IMF’s Economic Outlook for Asia and Pacific on the sidelines of the Board of Governors 56th ADB Annual Meeting in Incheon, Republic of Korea yesterday

• Lists fast-tracking proper implementation of reforms; wrapping up debt restructuring among key challenges
• IMF team due in two weeks ahead of June review

The International Monetary Fund Director Asia and Pacific Department Krishna Srinivasan yesterday said if Sri Lanka comes through with all the reforms, fast-track the proper implementation and warp-up the debt restructuring by September, the economy will be on a path to recovery from 2024.

 “The program itself is a very ambitious one, in terms of fiscal, monetary, governance and social safety net reforms. The next step in the process for Sri Lanka is to engage in good faith with all creditors and be done before the first review. If the Government can fulfil the reforms and implement them successfully, the country will be on a path to recovery going forward,” he said at the media briefing of the IMF Economic Outlook for Asia and Pacific on the sidelines of the Board of Governors 56th ADB Annual Meeting in Incheon, Republic of Korea.

His remarks come ahead of an IMF mission review meeting to be held in Colombo by the end of the month.

“We will be in Sri Lanka in two weeks’ time to see how the implementation is coming along. We will also be looking at the whole issue of debt restructuring,” he added. 

Noting that the program has lots of reforms embedded, Srinivasan emphasised that implementation is key. “Although we are projecting a 3% economic contraction for this year, we have earmarked a positive growth of 1.5% for 2024,” he added.

Last week, Parliament passed by majority vote the four-year IMF program aimed at solving the country’s economic crisis and reducing its debt burden.

In terms of the IMF Economic Outlook, he said despite the gloomy external outlook, Asia and the Pacific will remain dynamic, contributing 70% to the global economic growth — a significant improvement compared to recent years.

The IMF has also upwardly revised its October 2022 projection by 0.3% to 4.5% in 2023. The growth in the region will be led by China with a 5.2% growth rate this year after reopening the economy post-pandemic. The growth in the Chinese economy is expected to generate from consumption goods, and not from its usual investment goods.

He also said countries that are depending on Chinese travellers will benefit from the economic boom in China during this year.

China has managed to make it to the top 10 source markets of Sri Lanka, securing the sixth position with 5,118 Chinese travellers in April, despite the slow start due to COVID travel restrictions. In March it got into the top 10 source markets, securing the ninth position.