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    IMF says Sri Lanka’s economic recovery shows signs of improvement but challenges remain

    COLOMBO, SRI LANKA (AP) – Debt-stricken Sri Lanka, which declared bankruptcy last year, is showing signs of economic improvement but its recovery still faces challenges, the International Monetary Fund (IMF) said yesterday.

    The Indian Ocean island nation declared bankruptcy in April 2022 and said it was suspending repayment of its foreign debt. It reached an agreement with the IMF in March on a nearly USD3 billion bailout programme over four years.

    “Sri Lanka’s economy is showing tentative signs of improvement, in part due to the implementation of critical policy actions. But the economic recovery remains challenging,” said IMF deputy managing director Kenji Okamura after concluding a visit to Sri Lanka, where he met with the country’s top leaders and officials.

    Okamura said he welcomed Sri Lankan authorities’ “strong commitment to implement their ambitious economic programme, which is supported by the IMF.”

    IMF previously said Sri Lanka’s economy is expected to resume growing in 2024 after contracting three per cent this year.

    A man buys goods at a market place in Colombo, Sri Lanka. PHOTO: AP

    The expected economic growth of 1.5 per cent next year hinges critically on the economic reforms Sri Lanka has agreed to undertake.

    “Now, more than ever, it is essential to continue the reform momentum under strong ownership by both the authorities and the Sri Lankan people,” Okamura said in a statement yesterday.

    Sri Lanka’s foreign debt exceeds USD51 billion, of which USD28 billion must be repaid by 2027.

    Sri Lanka has now started negotiations with its creditors on debt restructuring.

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