An International Monetary Fund (IMF) mission team, led by Evan Papageorgiou, IMF Mission Chief for Sri Lanka, visited Colombo from July 21 to 25, 2025. The visit aimed to discuss recent macroeconomic developments and the progress of economic and financial policies under Sri Lanka's economic reform program supported by the IMF’s Extended Fund Facility (EFF).
At the conclusion of the mission, Mr. Papageorgiou stated: “The Sri Lankan authorities’ economic reform program is yielding commendable outcomes. Real GDP grew by 4.8 percent y/y in 2025Q1, outperforming expectations. Headline inflation was at -1.1 percent y/y in 2025Q2 and is gradually returning to target.”
He noted that gross international reserves were at US$6.0 billion at the end of June 2025, with tax revenue collection improving due to strong performance in VAT and taxes on imported motor vehicles.
Despite a positive economic outlook, Mr. Papageorgiou highlighted increased downside risks due to potential high tariffs on exports, trade policy uncertainty, and geopolitical tensions. He emphasized the importance of maintaining reform momentum to enhance resilience and safeguard economic progress.
Mr. Papageorgiou stressed the need for sustained efforts to raise fiscal revenues to meet medium-term objectives for debt sustainability. This includes strengthening tax frameworks, boosting compliance, broadening the tax base, and enhancing public financial management.
He also encouraged completing bilateral agreements with remaining creditors swiftly as part of the nearing completion of the debt restructuring process.
Monetary policy should prioritize price stability while safeguarding central bank independence. Continued reserve accumulation and exchange rate flexibility are key priorities.
The IMF team met with several government officials including President Anura Kumara Dissanayake and Central Bank Governor Dr. P. Nandalal Weerasinghe during their visit.
“We would like to thank the authorities for the excellent collaboration during the mission and reaffirm our commitment to supporting Sri Lanka at this uncertain time,” concluded Mr. Papageorgiou.