IMF Chief Kristalina Georgieva Pledges Support for Sri Lanka’s Economic Recovery

In a recent virtual meeting with Sri Lankan President Anura Kumara Dissanayake, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), expressed her commitment to supporting Sri Lanka’s ongoing economic recovery. Georgieva praised the South Asian nation for its "remarkable turnaround" after facing severe economic challenges in recent years. The IMF chief emphasized that the stabilization of Sri Lanka’s economy is a significant achievement, particularly for its most vulnerable populations. Highlighting the progress made, Georgieva noted that the country has come a long way since it teetered on the brink of collapse, with the economy now showing signs of strong performance.

President Dissanayake’s Approach to Economic Recovery

President Anura Kumara Dissanayake, who assumed office in September 2023, has taken a pragmatic approach to addressing Sri Lanka’s economic woes. Initially, he had campaigned on promises to renegotiate the terms of the IMF bailout package secured in 2023. However, since taking office, Dissanayake has continued to implement the austerity measures introduced by his predecessor, albeit with some adjustments. These measures, while necessary for economic stabilization, have proven unpopular among the general public due to their short-term impact on living costs. Despite this, Dissanayake has remained committed to reducing Sri Lanka’s debt burden and attracting private investment to spur economic growth.

IMF’s Role in Sri Lanka’s Economic Stabilization

The IMF played a crucial role in helping Sri Lanka navigate its economic crisis. In 2023, the Fund approved a $2.9 billion bailout package to support the country’s recovery efforts. This assistance came after Sri Lanka declared its first-ever sovereign default in April 2022, triggered by a severe foreign exchange shortage and an economic meltdown. The bailout was part of a four-year reform program aimed at restoring economic stability and laying the foundation for sustainable growth. Georgieva reiterated the IMF’s confidence in Sri Lanka’s progress, pointing to the successful implementation of key reforms and the positive outcomes achieved so far.

Addressing Challenges Amid Global Uncertainty

Georgieva also acknowledged the challenges Sri Lanka faces in the context of global economic uncertainty. She emphasized the importance of taking robust domestic actions to strengthen the economy, particularly during a time when external conditions are less favorable. The IMF chief commended President Dissanayake’s government for its efforts to create a more favorable environment for investors, which is critical for attracting private capital and boosting economic activity. Georgieva expressed the IMF’s eagerness to continue supporting Sri Lanka’s recovery journey, signaling that the Fund stands ready to provide additional assistance as needed.

Future Reforms and Investor-Friendly Policies

President Dissanayake outlined his vision for Sri Lanka’s economic future during the virtual meeting with Georgieva. He expressed his determination to reduce the country’s debt levels and create a more attractive environment for domestic and international investors. To achieve this, Dissanayake’s government plans to introduce new legislation, including an Investor Protection Act, aimed at safeguarding the interests of investors and fostering confidence in Sri Lanka’s economy. These measures are expected to contribute to long-term economic stability and growth, putting the country on a more sustainable path.

Signs of Economic Progress

Recent indicators suggest that Sri Lanka’s economic recovery is gaining momentum. The IMF has noted that the country’s real GDP has recovered approximately 40% of the losses incurred between 2018 and 2023, marking a significant milestone in its economic rebound. In a show of confidence in Sri Lanka’s progress, the IMF disbursed $334 million in February 2024 as the fourth tranche of its four-year bailout package. This latest disbursement underscores the Fund’s approval of the reforms implemented so far and its confidence in the government’s commitment to continuing on the path of economic recovery. As Sri Lanka moves forward, the focus will remain on sustaining this progress and ensuring that the benefits of economic growth are shared equitably among all citizens.