As a result, once the International Monetary Fund is approved, Sri Lanka would receive 337 million US dollars in financial support, he stated.
At a news conference hosted by the IMF mission in Sri Lanka in the afternoon on March 21, 2024, at the Central Bank of Sri Lanka, its chairman, Peter Brewer, made this declaration following the conclusion of the second review of the work plan with the IMF.
According to Peter Brewer, successful progress is being made and the outcomes of Sri Lanka's reform program are praiseworthy.
He noted that Sri Lanka's work plan for economic reform was achieving excellent results, adding that the country's government's efforts are praiseworthy and that inflation in Sri Lanka has dropped more quickly than anticipated.
Simultaneously, the following topics were covered in the press statement released by Katsiaryna Svirydzenka, the deputy head, and Peter Brewer, the head of the IMF mission to Sri Lanka:
During the second assessment of the Economic Reform Work Program, which is funded by the four-year Extended Fund Facility (EFF), an agreement has been achieved at the working group level with the Sri Lankan authorities.
In light of this, the IV Act's discussions for the same have been concluded by 2024. On March 20, 2023, the International Monetary Fund Executive Committee agreed an extension of the financial facility arrangement, including a credit facility of 2.3 billion SDR (3 billion US dollars).
The effects of the economic reforms are starting to become apparent. It is imperative to concentrate on preventing fraud and administrative errors in order to maintain stability.
The IMF's Financial Executive Committee and Executive Board will soon endorse this working group-level accord.
Conducting comprehensive operations by the relevant authorities,
Verifying the multilateral stakeholders' financial contribution, the length of the restructuring, the monitoring of the actions, determining whether sufficient progress has been made with debt restructuring, and concluding the examination of financial sustainability are all required.
Under the Extended Fund Facility, the Sri Lankan government has made headway in putting a sustainable restructuring plan into action, and the results have been impressive, showing early signs of economic revival, rapid inflation containment, and strengthened domestic reserves.
Significant financial changes have boosted Sri Lanka's public financial management. With the exception of indicators on social expenditure, performance has been reinforced with all performance norms and indicator targets being met by the end of December 2023.
By the end of February 2024, a number of strategic initiatives had been finished ahead of schedule, and several sectors were still in the process of transformation.
The state of the economy will steadily improve. The third and fourth quarters of 2023 saw recorded growth of 1.6 and 4.5 percent, respectively. The manufacturing, construction, and service sectors are all still expanding, according to high-frequency economic data. From seventy percent in September 2022 to five percent in February 2024, inflation has decreased.
By the end of February 2024, official reserves had increased to 4.5 billion, mostly due to the central bank's large foreign exchange purchases.
Maintaining the current pace of changes is necessary to steer the economy toward inclusive and sustainable growth. It is admirable that the Sri Lankan administration is so dedicated to economic reforms. In 2025 and beyond, the implementation of a wealth tax will enhance income streams and promote progress.
Enhancing anti-corruption initiatives and revenue management are crucial components of increasing tax collection.
Sufficient upkeep of fuel and power rate adjustments would assist in reducing the financial risks that public sector organizations confront. Despite the fact that inflation has decreased more quickly than anticipated, vigilance is still required to manage inflationary pressures and maintain economic stability.
A significant step towards debt sustainability has been taken by Sri Lanka with the signing of policy agreements on credit transactions with the Import-Export Bank of China and the Official Creditors Group. The next stage is to sign agreements with the extra private lenders in compliance with the applicable standards and to complete the agreements with the official lenders. This will facilitate the country's debt sustainability transition to a mid-term state.
The Sri Lankan government's newly unveiled Action Plan on governance is a significant step forward. In addition, persistent work is required to combat fraud, restore public trust in the economy, and accomplish robust, inclusive economic growth.
During a visit with tea plantation workers in Nuwara Eliya, an IMF team learned about some of Sri Lanka's most vulnerable issues. It is crucial that social security programs like "Ashwesuma" safeguard the weak and impoverished. Additionally, efforts must be made to grow them.
The participants in the meeting included the International Monetary Fund committee, President Ranil Wickremesinghe of Sri Lanka, Governor Kalanithi B. Nandalal Weerasinghe of the Central Bank of Sri Lanka, Minister of Power and Energy Kanchana Wijesekara, Minister of State Sehan Semasinghe, Chief of the Presidential Task Force and Advisor to the President on National Security Sagala Ratnayake, Secretary to the Treasury K.M. Mahinda Siriwardena, members of parliament, representatives from the private sector, civil society organizations, and development stakeholders were also present.
We express our gratitude to the Sri Lankan government for their outstanding collaboration," the statement read.
Kalanithi Sarwat Jahan, the International Monetary Fund's resident representative, attended this press conference as well.