IMF reiterates call for SL to maintain fiscal discipline, reform SOEs

Friday, 17 October 2025 00:23 - - {{hitsCtrl.values.hits}}

Update at release of Regional Economic Outlook: Asia and Pacific at IMF-World Bank Annual Sessions in Washington

IMF Asia and Pacific Department Director Krishna Srinivasan

IMF Deputy Director Thomas Helbling

The International Monetary Fund (IMF) yesterday said maintaining fiscal discipline and reforming State-owned enterprises (SOEs) will be crucial for Sri Lanka to sustain its recovery and build long-term economic resilience.

At a press briefing on the latest Regional Economic Outlook, IMF Asia and Pacific Department Director Krishna Srinivasan and Deputy Director Thomas Helbling provided an update on Sri Lanka’s performance under its IMF-supported program.

Helbling said Sri Lanka is now benefitting from strong growth following a deep recession during the crisis. “After a deep recession during the crisis, Sri Lanka has now implemented the program and is benefitting from very strong growth—5% last year—with an estimated 4.2% this year and next year, going towards a potential growth rate of around 3%,” he said.

He emphasised that Sri Lanka must stay committed to reforms to sustain this progress. “At this point, the key advice is to continue with program implementation, realise 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 stabilisation,” Helbling said.

He added that maintaining macroeconomic stability and strengthening institutional frameworks were essential for long-term success. “Fiscal consolidation plays a key role. Ensuring the financial viability of SOEs and mitigating contingent fiscal risks will be crucial for sustaining these benefits,” he noted.

Srinivasan said Sri Lanka has made significant 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,” he said.

Helbling also pointed to the importance of institutional reforms. “Looking ahead, the key is to establish a strong institutional framework on both the macroeconomic policy and governance fronts. Public investment management and fiscal frameworks are critical components of this effort,” he said.

He commended the Government’s progress on governance reforms and program 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 SOEs, are crucial steps going forward,” Helbling said.

Commenting on possible price adjustments, he said such decisions depend on multiple factors, including weather conditions and global 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 added.

Both officials reaffirmed the IMF’s commitment to supporting Sri Lanka’s reform program, underscoring that consistent policy implementation is vital to achieving sustained growth and fiscal stability.