By Uditha Jayasinghe
COLOMBO (Reuters) – Sri Lanka plans to discuss strategies with the International Monetary Fund (IMF) to lure foreign investment, President Anura Kumara Dissanayake said on Monday, in the aftermath of the Indian Ocean nation’s financial crisis.
Sri Lanka has recovered strongly from the crisis caused by a record shortage of dollars, thanks to a $2.9-billion bailout from the IMF and efforts to cut inflation, rebuild reserves, and stabilise its currency over four years from March 2023.
Beyond last year’s economic growth of 5%, Sri Lanka still needs to focus on deeper reforms such as reforming loss-making state enterprises and trimming a bloated public service, Dissanayake said.
“As part of efforts to grow sustainably we will offer incentives to attract foreign investment and will hold discussions with the IMF in this regard,” he told a conference in Colombo, without giving a timeframe.
Sri Lanka defaulted on its foreign debt at the height of the crisis in 2022 but is close to finalising a $22.5-billion rework with support from the global lender.
Colombo boosted power prices by 15% last week in its effort to secure IMF executive board approval for the fifth tranche of its facility, standing at about $334 million.
Sri Lanka is among the small open economies that face major risks such as tariffs, geopolitical conflict and economic fragmentation, said Gita Gopinath, the IMF’s first deputy managing director.
“That is why there is no room for policy errors,” she added, pointing out that about half of Sri Lanka’s 16 past IMF programs had ended prematurely, with reform fatigue setting in and hard-won gains reversed.
Sri Lanka started talks with Washington after the United States imposed tariffs of 44% in April on its exports of about $3 billion, which were later suspended.
(Reporting by Uditha Jayasinghe, Writing by Sakshi Dayal, Editing by Sudipto Ganguly and Clarence Fernandez)
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