Sri Lanka has made commendable progress in implementing difficult but much-needed reforms and these efforts are bearing fruit as the economy is showing tentative signs of stabilisation, said the International Monetary Fund (IMF) on Wednesday.
An IMF mission team led by Peter Breuer and Katsiaryna Svirydzenka visited Colombo from September 14 to 27 to discuss economic and financial policies to support the approval of the first review of the program under the Extended Fund Facility (EFF) arrangement.
The statement issued after the discussion said inflation is down from a peak of 70 per cent in September 2022 to below two per cent in September 2023, with gross international reserves increasing by 1.5 billion US dollars during March-June this year.
"Despite early signs of stabilisation, full economic recovery is not yet assured. Growth momentum remains subdued, with real GDP in the second quarter contracting by 3.1 per cent on a year-on-year basis and high-frequency economic indicators continuing to provide mixed signals. Reserve accumulation has slowed in recent months," the statement said.
The statement said sustaining the reform momentum is critical to put the economy on a path towards lasting recovery and stable and inclusive economic growth, adding that the authorities have met the program's primary balance targets and remain committed to this important pillar of the program so as to support their efforts to restore debt sustainability.
