When the Fund approved the final tranche of the in July last year, the IMF agreed that Sri Lanka’s current monetary policy stance is appropriate, while observing that the slowdown in economic activity and declining imports are adversely affecting fiscal revenues and interest payments on government debt are higher than budgeted.
Although Sri Lanka has seen a remarkable progress in the country’s economy after the government wiped out the separatist Tamil Tiger rebel group, LTTE, in May 2009, the economic growth has started moderating in response to policy tightening and weakening global demand.
The IMF pointed out the need for the Sri Lankan government to continue structural reforms to put state-owned energy enterprises on a sound financial footing.
The delegation will return to Washington DC this week and report to the Board of Executives of their feedback on whether the government should be given the requested funds.
The IMF delegation, headed by John Nelms and including IMF’s resident representative in Colombo Koshy Mathai has also met with members of Sri Lanka’s main opposition United National Party (UNP), who had expressed concerns over the government’s economic policies to the visiting delegation.