Given the weak external environment and domestic policy tightening, aimed at restoring macroeconomic stability, Sri Lanka’s economy is expected to contract by 3 percent in 2023, before registering a modest growth of 1.5 percent in 2024, Krishna Srinivasan, Director of the Asia and Pacific Department of the International Monetary Fund (IMF) said.
Speaking at a Press conference in Colombo Monday he stated that the island nation has been facing a severe crisis because of past policy missteps and back-to-back economic shocks.
“We have been deeply concerned about the impact of the crisis on the Sri Lankan people, particularly the poor and vulnerable groups, and about the economic costs of the delay in the country’s access to external financing.”
On March 20, the IMF Executive Board approved a 48-month Extended Fund Facility of about 3 billion U.S. dollars to support Sri Lanka’s economic policies and reforms.
This marked an important step towards the resolution of the crisis, he said and Sri Lanka immediately received an initial disbursement of about $330 from the EFF arrangement, which is expected to catalyze new external financial including from the Asian Development Bank and the World Bank.
He said an IMF staff team, led by Peter Breuer, is also currently in Sri Lanka and will be here until May 23 for regular consultations ahead of the first review mission later this year.