Colombo: The International Monetary Fund (IMF) has stated that Sri Lanka's economic reform program is showing initial signs of recovery, marked by positive real GDP growth in the third quarter of 2023, low inflation, increased revenue collection, and the accumulation of external reserves. The announcement was made at the conclusion of the IMF mission team's visit, led by Peter Breuer, from January 11 to January 19.

The IMF team discussed recent macroeconomic developments and the progress made in implementing economic and financial policies under the Extended Fund Facility (EFF) arrangement. Breuer emphasized the importance of swift progress in introducing a progressive property tax to ensure fair burden-sharing while sustaining revenue-based consolidation.

He further highlighted the need for tax policy measures to be accompanied by the strengthening of tax administration, the removal of tax exemptions, and active measures to eliminate tax evasion for sustainable reforms. These efforts are crucial to building confidence among creditors and supporting Sri Lanka's initiatives to regain debt sustainability.

To maintain financial sector stability and enhance its capacity for supporting economic growth, the IMF stressed the urgency of finalizing amendments to the Banking Act, implementing the bank recapitalization plan, and strengthening financial supervision and crisis management frameworks.

Breuer also emphasized that the prompt completion of agreements with official creditors and resolution with external private creditors remains critical for Sri Lanka's economic stability. In March 2023, the IMF approved a 48-month extended arrangement under the EFF, providing approximately $3 billion to support Sri Lanka's economic policies and reforms.