Sri Lanka's economic recovery and debt restructuring efforts were the focus of a recent conference, which highlighted the country's progress amid global economic challenges. The event marked the midpoint of Sri Lanka's IMF-supported reform program, which aims to address issues such as slowing growth and rising tariffs.
The conference noted Sri Lanka's significant achievements since its crisis three years ago, characterized by depleted foreign reserves and unsustainable public debt. Today, essential goods are available again, inflation is under control, and the economy grew by 5% in 2024. Tax revenues have also increased substantially.
Key reforms have been implemented to improve governance and reduce corruption. The government has prioritized central bank independence and public financial management. "Our analysis shows that comprehensive fiscal governance and accountability reforms in Sri Lanka can boost GDP by more than 7 percent," stated an official at the conference.
Sri Lanka's decision to default on its public debt was described as difficult but necessary. External creditors forgave $3 billion in debt while restructuring another $25 billion with extended repayment terms. This action has improved Sri Lanka’s credit rating and reintegrated its bonds into global indices.
The lessons from Sri Lanka’s experience are being shared globally to aid other countries facing similar challenges. The IMF, along with other international bodies, is working to streamline sovereign debt restructuring processes worldwide.
Despite progress, challenges remain for Sri Lanka. Poverty rates need urgent attention, and domestic debt remains high. Continued macroeconomic stability is essential for sustained recovery. "None of this will be easy," acknowledged officials at the conference.
The importance of maintaining reform momentum was emphasized to avoid repeating past cycles of reform fatigue and reversed gains. Public engagement and transparency are crucial for ensuring responsive policies.
"This time must be different!" declared President Dissanayake, expressing hope that this will be the last IMF program needed by Sri Lanka.