The International Monetary Fund (IMF) is forecasting Sri Lanka’s economy to grow by 2.6% this year down from 3.6% in 2021. 

The projection for 2023 is a growth of 2.7% as per the IMF which this week released its forecasts for Asia and the Pacific countries. 

IMF Asia and Pacific Department’s Acting Director Anne-Marie Gulde-Wolf said In Sri Lanka, the rise in food and fuel prices and hit to tourism has exacerbated pre-existing vulnerabilities and debt sustainability pressures, leading to social unrest and policy instability. 

“The authorities have requested a Fund program and technical level discussions have started,” she added. 

“The requirement for fund lending will be progress toward debt sustainability,” Gulde-Wolf said, calling on Sri Lanka for measures to increase tax revenues to address critical spending needs.

“Monetary policy has to be tightened to keep inflation in check,” she said adding “We see a need for flexible exchange rates.”

According to Reuters, Gulde-Wolf did not reply to a question on the total value for any IMF package, nor the estimated timing of a conclusion to the negotiations with Sri Lanka.

Severe cuts on State sector expenditure