The longevity of the International Monetary Fund (IMF) program will be crucial to deliver on Sri Lanka’s promised reform agenda to maintain the economy from a global market perspective, Hayleys Group Senior Economist Deshal De Mel said.
Noting that the IMF program in Sri Lanka has managed to bring back the stability of currency, interest rates and investors’ confidence he said the initial tranches of the IMF program are based on relatively straight forward structural targets such as revenue enhancing reforms which don’t have any significant impact on economy.
“However, the government is likely to face difficulties when it comes to succeeding the latter part reforms of the IMF program, which include reviving state owned enterprises, trade taxes and liberalising the trade policy and so on. If we do have any delays in some of the reforms implementations, or some tranches being disbursed, it will deter the investor confidence to a greater level.”
He further added that Sri Lanka has got an excellent opportunity in terms of showing itself as a hub for trading activities in the Indian Ocean.In order to leverage on this, the country needs to formulate intact policies that could help garner more economic benefits.”
De Mel said much efforts are needed to attract export oriented FDI that have the ability to bring in new industries, especially in the area of textiles and apparel so that Sri Lanka will have much better balance in terms of its export basket.
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