IMF Backs Sri Lanka’s Plan to Transform Economy

COLOMBO (News 1st); Sri Lanka has unveiled a reform agenda aimed at unlocking long-term growth and resilience, as outlined in the latest International Monetary Fund (IMF) Staff Report released this July. 

At the heart of the reform package is a renewed focus on trade liberalization and export competitiveness. 

The government plans to rationalize para-tariffs with due consideration to revenue implications, streamline customs procedures in line with Trade Facilitation Agreement recommendations, and implement a National Export Strategy with a focus on expediting negotiations of Free Trade Agreements and entry into regional trade blocs.

These efforts are part of a broader National Export Strategy designed to integrate Sri Lanka into global value chains and elevate key sectors such as industrial manufacturing, information technology, business process outsourcing, and tourism.

The report emphasizes that private sector empowerment will be crucial to sustaining growth. 

With support from international development partners, Sri Lanka aims to cut bureaucratic red tape, modernize its regulatory framework, and reduce electricity costs through a more efficient energy mix. 

A significant shift is also underway to reduce the public sector’s footprint in the economy, thereby fostering competition and improving resource allocation. Additionally, the introduction of a digital land titling and registry system is expected to enhance property rights and facilitate investment.

In a forward-looking move, Sri Lanka is also prioritizing climate resilience amid escalating environmental threats. The report notes a sharp rise in climate-related disasters, which have jeopardized food security and livelihoods. To counter these risks, the government is ramping up investments in renewable energy, particularly solar and wind, with financing expected from both private and multilateral sources. Technical capacity-building initiatives are also underway to fast-track climate mitigation and adaptation strategies.