Representatives from major global money lending agencies in a meeting with Sri Lankan President Ranil Wickremesinghe on Monday observed that the economy of the island nation has shown initial signs of stabilisation but a "rapid and sufficiently deep external debt restructuring" remain essential for regaining a sustainable growth path.
Cash-strapped Sri Lanka has a total foreign debt of USD 46.9 billion, 52 per cent of which is owed to China, its largest lender.
India had pitched in with about USD four billion in assistance to Sri Lanka to immediately tide over its worst economic crisis and helped the island nation to access the International Monetary Fund (IMF) bailout package.
President Wickremesinghe, who is also the finance minister, presided over the second high-level roundtable discussion on 'Crisis to Recovery' with the participation of representatives from the World Bank (WB), Asian Development Bank (ADB), International Monetary Fund (IMF), and the Asian Infrastructure Investment Bank (AIIB).
This meeting was a follow-up to the previous one in December 2022.
The participants emphasised that a coordinated assistance programme, supported by the multilateral financial institutions, is required for Sri Lanka to recover from the economic crisis, Wickremesinghe’s office said.
“The Sri Lankan economy has shown initial signs of stabilisation, with moderating inflation, easing foreign exchange liquidity pressures, and some progress on debt restructuring, including the approval of the domestic debt restructuring strategy," the meeting noted.
Under the Government of Sri Lanka's reform programme, underpinned by the IMF Extended Fund Facility (EFF) and supported by other development partners, cornerstone legislation is being developed, and structural reforms are being implemented to restore stability and regain access to international financial markets.
"However, the path to recovery remains narrow, with limited fiscal and external buffers,” the participants underlined.
The meeting underlined that in order to move forward, “a rapid and sufficiently deep external debt restructuring, as well as the continued implementation of macro-fiscal and structural reforms that improve economic governance, enhance competitiveness, and protect the poor and vulnerable, remain essential for regaining a sustainable growth path”.
Wickremesinghe, in his address, emphasised the growth and strategic directions for Sri Lanka as it moves from recovery to a sustainable growth path.
The government will work hand-in-hand with the private sector to unlock key investments in new and existing economic sectors moving forward, together with exploring opportunities in pursuing Green initiatives and championing Sri Lanka as a regional logistics hub in the near future, a press release quoted the president as saying.