Senior US official discusses Sri Lanka's IMF program in Colombo

FILE PHOTO: Sri Lanka’s President Ranil Wickremesinghe speaks during an interview with Reuters at his office in Colombo, Sri Lanka November 28,2023. REUTERS/Dinuka Liyanawatte/File Photo

By Kanishka Singh

(Reuters) – Senior U.S. diplomat Richard Verma on Friday met Sri Lankan President Ranil Wickremesinghe and Foreign Minister Ali Sabry in Colombo, and discussed Sri Lanka’s economic recovery and progress on its IMF program, the U.S. State Department said.

WHY IT IS IMPORTANT

The South Asian island nation finalised a $2.9 billion bailout from the International Monetary Fund in March 2023, which helped temper skyrocketing inflation, improved state revenue and boosted foreign exchange reserves.

The country defaulted on its overseas debt in May 2022 after a severe shortage of foreign exchange reserves triggered the worst financial crisis since independence from Britain in 1948.

Sri Lanka has since made progress on about $11 billion of bilateral debt restructuring and hopes to have agreements in place with all key creditors, including bondholders, by May at the latest, Sabry told Reuters earlier this month.

KEY QUOTES

The State Department official and the Sri Lankan leaders “discussed progress on Sri Lanka’s IMF program, including economic and governance reforms aimed at putting Sri Lanka on the path to sustainable economic growth,” the department said in a statement.

BY THE NUMBERS

Sri Lanka’s economy is estimated by the World Bank to have contracted by 3.8% last year but is expected to grow by 1.7% in 2024. Sri Lanka’s central bank has projected a more optimistic growth of 3% for this year.

(Reporting by Kanishka Singh in Washington; editing by Jonathan Oatis)