IMF to resume Sri Lanka program discussions following Presidential Election

At a recent IMF press briefing, Julie Kozack, Director of the Communications Department, provided updates on Sri Lanka’s economic situation, ongoing reforms, and the upcoming presidential election.

During the briefing, Kozack emphasized the IMF’s focus on helping the country emerge from one of its worst economic crises while addressing the significance of the election for Sri Lanka’s debt restructuring efforts.

In response to a journalist’s question about the potential impact of Sri Lanka’s presidential election on its current IMF program, Kozack noted that the program, which has been in place since the Executive Board’s approval of the second review in June 2024, remains strong.

The completion of this review granted Sri Lanka access to around $336 million. Kozack highlighted that reform efforts have already shown promising results, with inflation declining, reserves increasing, and revenue mobilization improving.

However, she cautioned that vulnerabilities remain, and maintaining the reform momentum is crucial for long-term stability.

Kozack addressed concerns about the possibility of renegotiating the program after the September 21, 2024, presidential election. She clarified that the election is a decision for the people of Sri Lanka and that safeguarding the progress made so far is essential.

While the IMF will discuss the timing of the third review with the government after the election, Kozack assured that the program’s objectives remain unchanged and are vital for Sri Lanka’s recovery.

On the subject of debt restructuring, Kozack explained that an IMF team visited Colombo in August and noted that important milestones had been reached, including the execution of domestic debt restructuring and agreements with China’s EXIM Bank and the official creditor committee.

She reiterated that the IMF does not participate directly in negotiations between Sri Lanka and its creditors but assesses the overall debt sustainability, providing guidance when necessary.

Kozack also responded to broader geopolitical questions, emphasizing that the IMF supports international cooperation and trade ties, including those between BRICS members, as long as they promote reduced fragmentation and trade costs.

In conclusion, Kozack reinforced the IMF’s commitment to working closely with Sri Lanka, noting that while significant progress has been made, continued reforms and safeguarding recent achievements are critical for the country’s long-term economic recovery.