The IMF has stated that Sri Lanka's economy is facing "growing challenges," with public debt reaching "unsustainable levels," asking for immediate reforms in the island nation's economy, which is experiencing its worst economic crisis in decades.
Sri Lanka is currently experiencing a serious foreign exchange crisis, with reserves dwindling and the government unable to cover the cost of necessary imports.
"COVID-19 has wreaked havoc on Sri Lanka. The country was highly vulnerable to external shocks on the eve of the pandemic, owing to insufficient external buffers and high risks to public debt sustainability, exacerbated by the Easter Sunday terrorist attacks in 2019 and major policy changes, including large tax cuts in late 2019," the International Monetary Fund (IMF) said in a statement following its executive board's consultative meeting on February 25.
"Despite the country's steady economic recovery," the announcement stated, "Directors observed that the government confronts rising challenges, including unsustainable public debt, low international reserves, and chronically large financing needs in the coming years."
The IMF has also called for urgent economic changes on the island. Despite the continued energy and power crisis, and shortages of practically all basics including medicine, the administration has resolutely refused to turn to the IMF.
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