Sri Lanka’s acting finance minister says positive progress in securing second IMF tranche

Colombo lotus tower and public transport bus in Sri Lanka

Negotiations to secure the second tranche of funding from the International Monetary Fund (IMF) to Sri Lanka are progressing positively, Acting Finance Minister Shehan Semasinghe announced.

Minister Semasinghe emphasized that the government’s economic reform efforts are currently under evaluation by the IMF.

Furthermore, Minister Semasinghe noted that discussions to finalize the staff level agreement required for receiving the second instalment are anticipated to take place after President Ranil Wickremesinghe’s official visit to Germany.

Minister Semasinghe made these statements during a press conference held at the Presidential Media Centre on Thursday (September 28), under the theme ‘Collective Path towards a Stable Country.

The Minister further said:

President Ranil Wickremesinghe recently held crucial discussions with the IMF team currently in Sri Lanka, during which they conducted a special assessment of the country’s economic situation. The IMF team expressed appreciation for the economic reforms undertaken thus far.

“It is expected that negotiations to secure the staff level agreement will take place after President Ranil Wickremesinghe returns to the country following his official visit to Germany. Further negotiations are scheduled under the President’s chairmanship.

The IMF team has provided a positive review of Sri Lanka’s current financial situation. We believe that, after reaching a staff level agreement, future work will proceed robustly.”

“Compared to the previous year, the government revenue has seen a remarkable growth of 43%. The process of tax collection plays a pivotal role in bolstering government revenue. In addition to those already within the existing tax net, we are also focusing on individuals who are obligated to pay taxes. The IMF has also directed its attention towards government tax revenue.

Furthermore, the IMF has praised the efforts of the country’s citizens in implementing new economic reforms. The local debt optimization program is nearing its completion and discussions regarding foreign loans are already in progress with all creditors.”

“While some groups have claimed that Sri Lanka has been isolated in foreign debt optimization discussions, it’s important to note that no country has declared its unwillingness to support us under the foreign debt optimization program. These countries are actively engaged in discussions with us. We are confident that after completing the domestic debt optimization work, progress on foreign debt optimization will also be swift.”

“Everyone should maintain a positive outlook on this.

This year, our economic situation has significantly improved compared to a year ago. Inflation, which stood at 70% then, has now decreased to 1.3%, providing a substantial boost to our country’s economy.

Last year, the interest rate on treasury bills in the domestic market was as high as 30%. Today, it has reduced to 13%. This reduction is a significant advantage for our treasury.

Furthermore, our foreign reserves have increased and we are witnessing an upturn in tourism. Additionally, remittances from Sri Lankans abroad have resumed their normal flow. With the on-going economic development, we have laid out plans to continue our economic growth roadmap for the upcoming year without any hindrances.”

“As a nation, our path forward should prioritize sustainable economic growth and a positive mind-set is crucial. Economic reforms, which should have been initiated two decades ago, are now in progress. History has shown that many small countries achieved significant development through such reforms.

It’s important to acknowledge that we are currently navigating challenging times as a nation. If the President’s economic reform program continues on this trajectory, Sri Lanka can evolve into a nation with a robust economy in the future. Strengthening the economy may not align with the interests of groups pursuing narrow political gains, but with the anticipated second instalment from the International Monetary Fund, we can steer our country toward a positive economic outlook by 2024.”

(President’s Media)