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IMF Reports Progress in Sri Lanka’s Debt Restructuring, Urges Sustained Reform Momentum

The International Monetary Fund (IMF) has acknowledged significant progress in Sri Lanka’s debt restructuring efforts, signaling a positive step forward. However, the IMF cautioned that the country’s economic situation remains fragile, emphasizing the precarious path to debt sustainability. Consequently, sustained reform efforts are deemed crucial to stabilize the economy.

During a virtual press briefing on Sri Lanka’s second review of the Extended Fund Facility (EFF) program, held earlier today, IMF Senior Mission Chief for Sri Lanka Peter Breuer underscored the IMF’s commitment to respecting democratic processes, including forthcoming elections. He noted that election cycles may impact the timing of IMF missions aimed at assessing program compliance and discussing reforms.

Mr. Breuer addressed queries regarding potential adjustments to the IMF program by a newly elected government, particularly concerning tax reductions. He stressed the critical role of government revenue in mitigating Sri Lanka’s severe economic crisis, emphasizing the need to rebuild fiscal buffers to support sustainable economic recovery.

Highlighting legislative developments, Mr. Breuer informed that Sri Lanka has forwarded the ‘Public Financial Management’ law to Parliament. This legislative step is expected to fortify the fiscal framework, ensuring more responsible fiscal management and transparent use of government funds.

In conclusion, Mr. Breuer expressed openness to exploring diverse approaches to achieve program objectives, emphasizing the importance of realistic and achievable goals within the agreed program timeline.

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