COLOMBO, June 30 (Xinhua) -- The International Monetary Fund (IMF) said on Thursday that they had constructive and productive discussions with the Sri Lankan authorities on economic policies and reforms to be supported by an IMF Extended Fund Facility (EFF) arrangement.
A mission team led by Peter Breuer and Masahiro Nozaki visited Colombo from June 20 to 30 to discuss IMF support for Sri Lanka and the authorities' comprehensive economic reform program.
At the end of the mission, Breuer and Nozaki issued a statement, reaffirming the institution's commitment to supporting Sri Lanka at this difficult time in line with the IMF's policies.
The statement said Sri Lanka is going through a severe economic crisis, with its economy expected to contract significantly in 2022, while inflation is high and rising.
The staff team and the authorities made significant progress on defining a macroeconomic and structural policy package, and the discussions will continue virtually with a view to reaching a staff-level agreement on the EFF arrangement in the near term, according to the statement.
As Sri Lanka's public debt is assessed as unsustainable, the discussions with Sri Lankan authorities focused on designing a comprehensive economic program to correct the macroeconomic imbalances, restore public debt sustainability and realize Sri Lanka's growth potential.
The IMF recommended that given the low level of revenues, far-reaching tax reforms are urgently needed.
Other challenges that need addressing include containing rising levels of inflation, addressing the severe balance of payments pressures, reducing corruption vulnerabilities and embarking on growth-enhancing reforms.
"The authorities have made considerable progress in formulating their economic reform program and we are looking forward to continuing the dialogue with them," said the statement.
Sri Lanka, facing the biggest economic crisis since independence, has banked on an IMF relief package to salvage its economy. ■
