Maintaining fiscal discipline, reforming SOEs ‘crucial’ for Sri Lanka’s recovery - IMF
October 16, 2025 10:02 pm
The International Monetary Fund (IMF) has commended Sri Lanka’s continued progress under its economic reform program, highlighting strong growth momentum following the country’s recovery from a deep economic crisis.
At a press briefing presenting the latest regional economic outlook, Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, and Thomas Helbling, Deputy Director, provided an update on Sri Lanka’s economic performance and key policy priorities.
Speaking at the briefing, Thomas Helbling said Sri Lanka is now reaping the benefits of implementing its IMF-supported program after experiencing a severe recession during the crisis.
“After a deep recession during the crisis, Sri Lanka has now implemented the program and is benefiting from very strong growth — 5% last year, with an estimated 4.2% this year and next year, going toward a potential growth rate of around 3%,” Helbling said.
He emphasized that continued implementation of the program is vital to sustaining economic gains.
“At this point, the key advice is to continue with program implementation, realize the full benefits of the reforms, and ensure that growth remains on track. For Sri Lanka, what is important is to stay on the path of stabilization,” he added.
Helbling also stressed that maintaining macroeconomic stability and strengthening institutional frameworks are essential for long-term success.
“Fiscal consolidation plays a key role. Ensuring the financial viability of state-owned enterprises and mitigating contingent fiscal risks will be crucial for sustaining these benefits,” he noted.
Echoing this sentiment, Krishna Srinivasan said Sri Lanka has made remarkable progress compared to a few years ago.
“Sri Lanka has come a long way from where it was just a few years ago. Our message is to stay the course. The country has already done the difficult part — by continuing with reforms, you will continue to see the benefits,” Srinivasan said.
Helbling further observed that while multiple factors contributed to Sri Lanka’s earlier economic crisis, the focus should now be on strengthening governance and policy institutions.
“Looking ahead, the key is to establish a strong institutional framework on both the macroeconomic policy and governance fronts,” he said. “Public investment management and fiscal frameworks are critical components of this effort.”
He also acknowledged the government’s commitment to governance reforms that support the IMF program, noting “impressive progress” in meeting structural benchmarks.
“On electricity pricing and cost recovery, reforms continue as part of the structural benchmarks under the program. Restoring and maintaining fiscal discipline, as well as reforming state-owned enterprises, are crucial steps going forward,” Helbling explained.
Commenting on possible price adjustments, he added that such decisions depend on several factors, including climate conditions and international energy prices.
“These are part of ongoing program discussions. We cannot comment on individual policy decisions, but so far, the government has strongly supported the reform agenda,” he said.
Concluding the briefing, both officials reaffirmed the IMF’s support for Sri Lanka’s reform path, emphasizing that staying the course is essential to ensuring sustained growth, fiscal stability, and resilience.