Sri Lanka has achieved a significant economic growth amid the setbacks faced by the country over the past decades, regaining macro economic and financial stability in a short period of time, International Monetary Fund (IMF) Managing Director Dr. Kristalina Georgieva said recently, speaking on Ada Derana’s Hydepark programme with Indeewari Amuwatte.
Dr. Georgieva said: “Sri Lanka has made progress since the days when the economy was close to collapse,” and remains resilient through the shocks.
Dr. Georgieva also noted that the IMF demands attention to problems that must be resolved such as: fiscal soundness, the country should not spend more than it earns; an independent central bank, that can make decisions about price stability so that the economy is not hit by inflation in a way that tax grows to poverty; growth strategy, creating conditions for private-sector-led growth and job creation.
“The IMF has geopolitical factors that include trade policy changes, technology advancements and climate changes. All of these factors combined creates high uncertainty. The IMF collects information and analyses where the country stands and where it goes in the future. During times of uncertainty, the IMF can define together with the country and direct towards growth and betterment,” she said.
Furthermore, Dr. Georgieva recommends buffers to safeguard the economy and remain resilient. At a time of more frequent shocks, the IMF recommends having good reserves. “We are working with Sri Lanka to increase the level of reserves, to have a sound fiscal policy so that the country has fiscal buffers and when a shock hits, it is able to protect the communities and businesses,” she said.
The IMF was able to provide emergency financing over $ 200 million for Cyclone Ditwah-affected communities, she said, underscoring the institution’s role in assisting countries during crises.
According to the IMF, stated by Dr. Georgieva: “In a short time, Sri Lanka regained macro economic and financial stability. At one time, Inflation was 70% and now it is down to 2%. Growth was negative but now the economy has about 5% growth.”
A key factor Dr. Georgieva highlighted is that there has to be trust in civil services, which means corruption has to be eliminated, and Sri Lanka is the first Asian country in which the Government asks the IMF to do a governance assessment, to help to eliminate corruption.”
“Sri Lanka has experienced challenges over the past decade. It has gone through civil war and the pandemic, and there was social unrest due to the perception that the Government was falling short of meeting the aspirations of the people. Now, there is an opportunity for the country because there is a Government that can be entrusted by the people,” said Dr. Georgieva.