The International Monetary Fund (IMF) is hopeful that there will be a conclusion soon to Sri Lanka’s debt negotiations with the private creditors despite the setback while the road ahead for the country’s recovery is going to be harder, said IMF’s Asia and Pacific Director Krishna Srinivasan.
Speaking to the media at the Regional Economic Outlook for Asia and Pacific on Friday (19), he said that the debt restructuring negotiations of Sri Lanka are progressing well and there has been good progress with the official creditors.
He said that there are some setbacks in private creditor debt restructuring, “but again both parties are talking so I am hopeful there will be some conclusion,” he added.
He said that although the IMF does not get involved in the negotiations they are providing input to the partners who are in the negotiations both on the macro framework and what is falling ahead.
Moreover, he said that the IMF programme in Sri Lanka is bearing fruit as the real gross domestic product (GDP) expanded by 3% year-on-year in the second half of 2023 while the March 2024 inflation was 0.9% versus 70% peak inflation in September 2022.
He said that the reserves increased by $ 2.5 billion in 2023 and the primary balance reached a surplus of 0.6% of GDP in 2023.
“The programme which Sri Lanka embarked upon was ambitious, much needed but now it’s delivering results. I don’t want to jinx it, but the road ahead is going to be harder,” Srinivasan said.
He noted that there is still much more work to be done both in terms of fiscal policy and building reserves to become resilient.
“So you have to keep pursuing those reforms both on the fiscal side and the structural reform side including governance and reducing corruption,” he added.