IMF Chief Warns Sri Lanka Against “Reform Fatigue,” Hails “Remarkable Progress” Post-Crisis

The International Monetary Fund (IMF) today lauded Sri Lanka’s “remarkable progress” in its economic recovery but issued a stark warning against abandoning crucial reforms. Speaking at a conference in Colombo, IMF First Deputy Managing Director Gita Gopinath emphasized that the island nation’s current path “this time must be different.”

Gopinath highlighted significant strides since the severe crisis three years ago, noting the return of economic growth (5% in 2024), a surge in tax revenues by over two-thirds of GDP, and the restoration of essential supplies like fuel and medicine. She also praised the government’s commitment to governance reforms, including central bank independence and stronger anti-corruption measures, projecting that these could boost GDP by over 7% in a decade.

The IMF official detailed the successful sovereign debt restructuring, which saw external creditors forgive $3 billion and restructure another $25 billion, significantly easing the country’s financial burden. This, she noted, offers vital lessons for other debt-stricken nations.

However, Gopinath cautioned against complacency, recalling that half of Sri Lanka’s previous 16 IMF programs ended prematurely due to “reform fatigue.” With poverty rates still at 24.5% in 2024, she stressed the imperative for continued macroeconomic stability, structural reforms, and a relentless fight against corruption. “The country cannot afford to repeat that cycle,” she asserted.

Reiterating the IMF’s commitment, Gopinath echoed President Dissanayake’s hope that this would be Sri Lanka’s final IMF program. “We agree, and believe this is possible if Sri Lanka stays the course,” she concluded, underscoring the ongoing need for courage and sacrifice from the Sri Lankan people.