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IMF envisages Sri Lanka’s economy normalizing in 2018

The International Monetary Fund (IMF) envisages Sri Lanka’s economy normalizing in 2018 with the Real GDP growth projected to reach about 5 percent over the medium term.

The real GDP growth is projected to increase from 4.2 percent in 2017 to 4.6 percent in 2018, as agriculture recovers with the return of normal weather conditions while construction and services remain resilient, the global lender said in its ‘staff’ report on Sri Lanka.

Similarly, inflation is projected to revert to around 5 percent in end-2017 and throughout 2018. The current account deficit is projected to shrink from 3 percent of GDP in 2017 to 2.5 percent in 2018.

Over the medium term growth is projected to reach about 5 percent, consistent with IMF staff estimate of potential growth.

The IMF Friday released the ‘staff’ report pertaining to the third review of the Extended Arrangement Under the Extended Fund Facility with Sri Lanka. The report includes the Third Review under the Extended Arrangement under the Extended Fund Facility and Request for Modification of Performance Criterion-Press Release; Staff Report; and Statement by the Executive Director for Sri Lanka.

Sri Lanka is pursuing a 3-year reform program with IMF support under the extended arrangement under the Extended Fund Facility (EFF) since June 2016. Macro stabilization and two major tax reforms were the key outcomes of the first half of the program.

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