May 23, Colombo: An International Monetary Fund (IMF) mission led by Messrs. Peter Breuer and Masahiro Nozaki conducted a staff visit to Colombo from May 11 to 23, 2023 to discuss recent economic developments and implementation of the Fund-supported program.

At the end of the visit, the mission has concluded that achieving timely restructuring agreements with creditors in line with the program targets by the time of the first review is essential to restoring debt sustainability.

The Mission emphasized that keeping up the reform momentum and ensuring timely implementation of program commitments, including to ensure central bank independence, improve governance, and protect the vulnerable, are key for Sri Lanka to emerge from the economic crisis.

At the conclusion of the visit, Messrs. Breuer and Nozaki issued the following statement:

“During the visit, we discussed recent macroeconomic and financial sector developments. Following strong policy efforts, the macroeconomic situation in Sri Lanka is showing tentative signs of improvement, with inflation moderating, the exchange rate stabilizing, and the Central Bank rebuilding reserves buffers. However, the overall macroeconomic and policy environment remains challenging.

“We welcome the authorities’ ongoing efforts in meeting key commitments under the Fund-supported program. Performance under the program will be formally assessed in the context of the first review of the Extended Fund Facility arrangement, which is expected to be undertaken in September 2023. The mission discussed additional fiscal efforts that will be critical to ensure successful revenue mobilization. We also discussed progress on debt restructuring, noting the ongoing discussions with both foreign and domestic creditors. Achieving timely restructuring agreements with creditors in line with the program targets by the time of the first review is essential to restoring debt sustainability. Keeping up the reform momentum and ensuring timely implementation of program commitments, including to ensure central bank independence, improve governance, and protect the vulnerable, are key for Sri Lanka to emerge from the economic crisis.

“The team met with President and Minister of Finance Wickremesinghe, Governor Weerasinghe, Secretary to the Treasury Siriwardana, senior government officials, members of the opposition parties, CSOs, think tanks, trade unions, the private sector, and development partners. We would like to thank the authorities for the open and collaborative discussions and look forward to our continued close engagement.”