According to Krishna Srinivasan, director of the International Monetary Fund’s Asia and Pacific department, Sri Lanka’s economy is expected to contract by 3% in 2023 due to the weak external environment. The IMF team recently held regular consultations in Colombo ahead of its first review mission later this year. The team met with various officials, including President and Finance Minister Ranil Wickremesinghe.
Sri Lanka has been dealing with its worst financial crisis since gaining independence in 1948. The island nation received a $2.9 billion bailout from global financial institutions and defaulted on its foreign debt last April. Earlier this month, Sri Lankan authorities formally submitted a request for debt settlement to the official Bilateral Creditors Committee, which includes members of the India and Paris Clubs. China, the island’s largest bilateral lender, participated in the meeting as an observer.
Overall, the situation in Sri Lanka remains difficult, and the IMF team’s consultations were aimed at assessing the country’s economic standing. The first review mission later this year will provide further insight into Sri Lanka’s progress towards recovery.