In remarks prepared for a conference in Colombo, Gita Gopinath, first deputy managing director of the International Monetary Fund, said Sri Lanka's reforms had tested the country's social fabric, but also paved the way for a more resilient future.
The country in April reached a staff-level agreement with the IMF on a fourth review of the bailout package, which will give it access to about $344 million in financing upon board approval.
“We must now turn our focus from crisis response to sustainable recovery. There is a lot that is still needed,“ she said, urging Sri Lankan authorities to keep working on governance reforms and reducing poverty and debt.
“That is why there is no room for policy errors,“ she said, noting that about half of Sri Lanka's 16 past IMF programs had ended prematurely, with reform fatigue setting in and hard-won gains being reversed.
Gopinath said the IMF agreed that was possible, if Sri Lanka stayed the course, continued to pursue inclusive reforms, increased transparency and ensured its policies were responsive and responsible.
Challenges included facilitating collaboration among a range of official creditors, including France, Japan, India and China, and including domestic debt in the restructuring plans, albeit by focusing on lower interest rates and longer maturities instead of nominal debt reductions, she said.
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