COLOMBO, Sri Lanka — Debt-stricken Sri Lanka, which declared bankruptcy last year, is showing signs of economic improvement but its recovery still faces challenges, the International Monetary Fund said Friday.
The Indian Ocean island nation declared bankruptcy in April 2022 and said it was suspending repayment of its foreign debt. It reached an agreement with the IMF in March on a nearly $3 billion bailout program over four years.
“Sri Lanka’s economy is showing tentative signs of improvement, in part due to the implementation of critical policy actions. But the economic recovery remains challenging,” said IMF deputy managing director Kenji Okamura after concluding a visit to Sri Lanka, where he met with the country’s top leaders and officials.
Okamura said he welcomed Sri Lankan authorities’ “strong commitment to implement their ambitious economic program, which is supported by the IMF.”
IMF previously said Sri Lanka’s economy is expected to resume growing in 2024 after contracting three percent this year. The expected economic growth of 1.5 percent next year hinges critically on the economic reforms Sri Lanka has agreed to undertake.
“Now, more than ever, it is essential to continue the reform momentum under strong ownership by both the authorities and the Sri Lankan people,” Okamura said in a statement Friday.
Sri Lanka’s foreign debt exceeds $51 billion, of which $28 billion must be repaid by 2027. Sri Lanka has now started negotiations with its creditors on debt restructuring. (Ap)