The International Monetary Fund says that despite positive growth momentum, the Sri Lankan economy is facing challenges due to a difficult external environment and a period of significant political transition.

The IMF made this statement following the conclusion of the Article 04 Consultation of the IMF Executive Board.

According to the statement, the Board welcomes Sri Lanka’s commitment to strengthen macro-economic and financial stability by putting public finances on a more sustainable path, rebuilding foreign exchange reserves, and undertaking reforms to foster sustainable and inclusive growth.

It adds that the steadfast implementation of prudent policies under the fund-supported programme will be important to improve market confidence and encourage investment.

The Directors of the IMF have also welcomed Sri Lanka’s commitment to reduce the fiscal deficit and underscored that well-designed growth-friendly consolidation efforts will be necessary to ensure fiscal and debt sustainability.

In addition, the statement noted that priority should be given to enhancing revenues through the implementation of new tax legislation, eliminating exemptions, building capacity in revenue administration, and tightening expenditure management.

The importance of pushing ahead with state enterprise reform, including expeditious resolution of Sr Lankan Airlines has also been highlighted.

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