Sri Lankan President Wickremesinghe to meet IMF officials for crucial talks on economic reform plan

Sri Lankan President Ranil Wickremesinghe will meet the officials of the International Monetary Fund on Tuesday to hold crucial talks on the hard economic reforms undertaken by the government to stabilise the fiscal system of the cash-strapped island nation.

The officials of the International Monetary Fund (IMF) are visiting the country to conduct the first review of its USD 2.9 billion bailout package approved for crisis-hit Sri Lanka in mid-March. The second tranche of USD 300 million is to be released after the ongoing review.

During the review, the government will have to convince the global lender that it has fulfilled the conditions set by the IMF to revive the island nation's economy.

“These two weeks would be crucial for our economic reform programme. At this IMF review, we will be assessing the extent to which we have complied in setting up reforms and how far we need to go,” State Minister of Finance Shehan Semasinghe told reporters in Colombo.

Sri Lanka has executed some of the tough reforms to stabilise the nation's economy. Semasinghe said some of the reforms had hit the people hard.

“These were reforms that should have been implemented a long time ago...We only started doing so when the crisis hit,” he said.

Sri Lanka was hit by its worst economic crisis in history when the country's foreign exchange reserves fell to a critical low and the public came out on the streets to protest the shortage of fuel, fertilisers and essential commodities.

The country began seeking the IMF bailout only after it declared its first-ever sovereign debt default in April 2022.

The resultant political crisis forced the then president Gotabaya Rajapaksa to resign in July 2022.

His successor Wickremesinghe has steered the economy out of the mess by lowering inflation.

Having entered the IMF programme, the government set in a series of tax and utility services reforms which meant higher taxes and tariff hikes.

Still, analysts say the island’s economy has only partially recovered.

An Indian credit line of nearly USD 4 billion provided a lifeline to the country until the bailout agreement with the IMF was reached.