IMF chief says Sri Lanka stabilised, pledges more help

COLOMBO: IMF chief Kristalina Georgieva pledged to support Sri Lanka’s economic recovery, praising the cash-strapped nation’s “remarkable turnaround” during online talks with its president.

The International Monetary Fund Managing director promised unspecified help to the South Asian nation during a virtual meeting with President Anura Kumara Dissanayake, his office said Saturday.

“The economy has stabilised and is now performing well,” Georgieva said during her overnight meeting with Dissanayake, according to a video clip shared by the Sri Lankan presidency.

“This is so important for people, especially for poor people. We see a remarkable turnaround from the days when it was near collapse,” she said.

Sri Lanka secured a $2.9 billion IMF bailout in 2023 after declaring its first sovereign default in April 2022 following an unprecedented foreign exchange shortage and an economic meltdown.

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Dissanayake, a self-avowed leftist, came to power in September promising to renegotiate the IMF loan but has since continued with his predecessor’s painful and unpopular austerity measures.

“Taking action domestically to strengthen the economy in this time of greater global uncertainty is even more important than it would be if we were in a sort of plain vanilla global economic situation,” said Georgieva.

She added that the IMF “would be very happy and eager to back you fully in what has been a successful journey”.

Dissanayake told her that he was keen to reduce the island’s debt and boost private investment.

“To achieve this, we will introduce suitable legislation, including an Investor Protection Act, and ensure a secure and favourable environment for all investors,” his office quoted him as saying.

Last month, the IMF released $334 million, the fourth installment of the four-year bailout loan, to support the reform programme.

The IMF has said reforms were bearing fruit and the economic recovery has been remarkable, with Sri Lanka’s real GDP recovering “40 per cent of its loss incurred between 2018 and 2023.”