Sri Lankan authorities have assured International Monetary Fund (IMF) that they are taking steps to complete all the pending actions and structural benchmarks for the sixth review of Sri Lanka’s Extended Fund Facility (EFF) over the next few weeks.
A staff team from the IMF led by Manuela Goretti visited Colombo during September 10-25, 2019 to conduct the sixth review and the team had reached understandings at the staff level with the Sri Lankan authorities.
The team reached understandings at the staff level with the Sri Lankan authorities on the sixth review of the EFF-supported program.
The team welcomed the authorities’ efforts to normalize the security situation in the country after the tragic terrorist attacks in April and mitigate the impact of the shock on the economy.
Real GDP growth was revised to 2.7 percent in 2019 and is projected to improve to 3.5 percent in 2020, as tourist arrivals and related activities gradually recover. Inflation is expected to remain stable at around 4.5 percent during 2019-20.
Despite the recent fall in tourist arrivals and remittances, the current account balance is projected to improve to 2.6 percent of GDP in 2019 on the back of lower imports and stronger exports supported by the exchange rate correction in late 2018.IMF observed .
The mission welcomed the authorities’ commitment to advance revenue-based fiscal consolidation in 2020 and over the medium term to preserve the gains achieved under the program, put the high public debt on a downward path, and provide space for better-targeted social and capital spending.
The mission supported the Central Bank of Sri Lanka (CBSL)’s prudent and data-dependent monetary policy approach and their renewed commitment to strengthen reserve buffers in line with program understandings.
(LI)