The continuation of the International Monetary Fund Extended Fund Facility (IMF-EFF) programme is critical to the recovery of the economy, former Treasury Secretary Dr. R.H.S. Samaratunga said yesterday.
“The recovery of the Sri Lankan economy hinges on the continuity of the reforms implemented thus far, and as part of this process, the successful continuation of the IMF-EFF arrangement and completion of the debt restructuring process remain paramount irrespective of which political leaders take over the country.”
The economic crisis was in the making as the country was maintaining structural macroeconomic imbalances over several decades, he said.
Dr. Samaratunga recalled that the economic crisis has led to unprecedented levels of inflation, near-depletion of foreign exchange reserves, contraction of the economy, loss of livelihood, shortages of fuel, food and medical supplies and power cuts and socio-political tension.
These negative sentiments led to Sri Lanka going in for sovereign default on April 12, 2022, for the first time after independence.
In addition, several missteps reinforcing long-standing ills too hastened the crisis. Dr. Samaratunga said that the sudden reduction of taxes caused a huge revenue loss to the government while excessive money printing too contributed towards the economic crisis.
He also recalled that the government providing handouts began during the Second World War by offering half a bottle of kerosene oil and two measures of rice, and over the years it has increased at an alarming rate.
Dr. Samaratunga said to overcome the economic crisis, Sri Lanka sought the assistance of the IMF in early 2022 and agreed on a four-year stabilisation EFF programme with US$ 3.0 billion in March 2023.
He said that this resulted in a positive turnaround and stressed that the IMF reform agenda should continue in the future as well.
Former Treasury Secretary Dr. R.H.S. Samaratunga said the economic crisis was in the making as the country was maintaining structural macroeconomic imbalances over several decades.
In addition, several missteps reinforcing long-standing ills too led to hastening the crisis. He said that the sudden reduction of taxes caused a huge revenue loss to the government while excessive money printing too contributed towards the economic crisis.
Dr. Samaratunga also recalled that the government handouts began during the Second World War by offering half a bottle of kerosene and two measures of rice and over the years it increased at an alarming rate.
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