IMF Reviews Will Factor in U.S. Trade Deals—But No One-Size-Fits-All Fix

COLOMBO (News 1st); As global trade dynamics shift under new U.S. policy directions, the International Monetary Fund (IMF) has acknowledged that small South Asian economies like Sri Lanka, Maldives, and Bangladesh may face heightened uncertainty in their external economic environments. The IMF has confirmed that such developments could influence the structure and targets of its ongoing financial programs—but only through tailored, country-specific assessments.

Responding to a question posed by News 1st's Zulfick Farzan on whether the IMF would consider revisiting program targets or financing arrangements for smaller economies already under IMF-supported programs, given the potential impact of shifting trade relations,, Julie Kozack, Director of the IMF Communications Department, clarified that the Fund’s review process is designed to accommodate both retrospective and forward-looking evaluations. Each program review assesses a country’s compliance with existing commitments while also factoring in global economic trends and their potential impact on the country’s outlook.

“In all program contexts, the reason why we have reviews is to assess past compliance and to look ahead at economic developments,” Kozack explained. “If changes in the trading environment significantly affect a country’s economy, those will be taken into account—on a case-by-case basis.”

The temporary suspension of Trump-imposed reciprocal tariffs is set to expire on July 9.

U.S. President Donald Trump had imposed a 44% tariff on Sri Lankan exports to the United States, citing it as a reciprocal measure against what the U.S. claimed were 88% trade barriers imposed by Sri Lanka.

The US President shocked the world and roiled markets on April 2, which he dubbed “Liberation Day,” when he imposed tariffs of as high as 50% on nearly every country, before announcing a 90-day reduction in a stunning reversal just a week later.

In 2024, 23% of Sri Lanka’s total exports were directed to the United States.

Of that 23%, approximately 70% consisted of apparel products.

The total export revenue earned from the U.S. amounted to USD 3 billion, with USD 2.5 billion coming from apparel alone.

Given this context, if Sri Lanka fails to reach a favorable agreement with the United States, the country could face a range of serious challenges.

It was previously stated that discussions were underway between Sri Lanka and the U.S. Trade Representative, and that a joint statement would be issued.

However, no concrete action plan has yet been announced to address this issue.