IMF Reports Gradual Improvement in Sri Lanka's Debt Outlook

Sri Lanka's debt risks remain high though show signs of improvement, according to the IMF. Recent reviews under the Extended Fund Facility have led to a release of $695 million, bringing total IMF support to $2.4 billion. Despite challenges, policy reforms are essential for continued progress.

The International Monetary Fund (IMF) has highlighted that Sri Lanka's debt risks continue to pose challenges. However, the debt trajectory is showing a positive trend amid ongoing economic reforms supported by the global lender.

Following the latest reviews, the IMF released an additional $695 million from the Extended Fund Facility, raising the total support to roughly $2.4 billion. Ivan Papageorgiou, leading the IMF mission to Sri Lanka, emphasized the importance of maintaining strong policy reforms to keep debt risks manageable. He stressed the need for sustained economic growth and inflation control, noting substantial gains in tax revenue and budget surplus.

The IMF's Extended Fund Facility, approved earlier in 2023, aims to help address structural vulnerabilities and support Sri Lanka's reform program. This program seeks to enhance fiscal and debt sustainability, protect vulnerable communities, and advance key growth-oriented reforms.