Copyright lankabusinessonline
The International Monetary Fund (IMF) has stressed that Sri Lanka must "stay the course" and complete its "own homegrown reform program" to fully stabilize its economy by 2028, signaling the crucial nature of domestic commitment to the country's long-term financial health. Speaking at a recent press briefing, Thomas Helbling, Deputy Director of the Asia and Pacific Department, affirmed that remaining focused on the reforms will help put concerns about the 2028 debt repayment forecasts "in perspective." This statement comes as opposition parties voice challenges regarding the feasibility of loan repayment deadlines aligned with the current government revenue projections. The IMF has revised Sri Lanka's growth projection for the upcoming year to 3.1%. However, Helbling clarified that this adjustment does not stem from concerns over low capital expenditure, as speculated, but rather represents a normalization following a stronger-than-expected post-crisis rebound. "Sri Lanka had a deep recession in 2022-2023 during the balance of payment crisis," Helbling noted. "With the government embarked on a reform program… there was a strong rebound in growth." He highlighted that the economy had seen robust growth, registering 5% last year and 4.8% in the first half of this year. The forecast of 3.1% reflects the economy's transition from a temporary, post-recession surge back to its long-term trend growth rate, happening "a bit sooner" than initially anticipated due to the strong recent performance. On the critical issue of State-Owned Enterprise (SOE) reform, the IMF confirmed satisfaction with the government's recent decision to keep electricity tariffs at bay following a review. The official indicated that the IMF Staff-Level Agreement reached earlier in the month for the Fifth Review of the Extended Fund Facility (EFF) program signals that the IMF is content with the progress. The principle of cost recovery for utilities remains a core structural benchmark of the reform program, aimed at reducing financial risks to the budget and taxpayers. While acknowledging the concerns over the 2028 revenue projections raised by opposition parties following the near-completion of debt restructuring, Helbling steered the focus back to the present reform momentum. "On the program projections, the focus is on current year and next year," he stated, reinforcing the message that the consistent and complete implementation of Sri Lanka's homegrown reform program is the paramount step needed to ensure the economy is fully stabilized and back on a sustainable path well before the 2028 repayment challenges surface.
