Sri Lanka’s Real Growth is anticipated to recover from -3.6% in 2023 to 2.7% in 2024-25 says First Capital Research.
Growth is constrained by limited bank credit, fiscal consolidation and uncertainties around debt restructuring and the upcoming elections. To exceed the 5% target in 2024 due new fiscal measures should be implemented and the country should have improved tourist arrivals and remittances.
IMF completed the Second Review under the 48-month Extended Fund Facility (EFF) for Sri Lanka on June 12, 2024. About USD 336.0Mn will be disbursed under the third tranche, bringing the total disbursed to around USD 1.0 Bn to date.
In the second review, IMF concluded that Sri Lanka’s program performance at end-December was strong and highlighted that all quantitative targets (QPCs) for end-December 2023 were met, except the indicative target (ITs) on social spending. Most structural benchmarks (SBs) due by end-April 2024 were either met or implemented with delay.
The IMF has called for the strengthening of macroeconomic policies to restore economic stability and debt sustainability and the sustenance of reform momentum to promote long term growth. IMF has also called for a completion in restructuring of domestic law, foreign currency loans and the recapitalization of commercial and state-owned banks. The central bank will continue to offload T-bills, net credit to the government level is expected to remain flat from Sep-2024 to March 2025.
