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Updated December 16th, 2023 at 23:02 IST

Sri Lanka's Economy witnesses positive growth 'first time' amid IMF Reforms

Official data indicated that Sri Lanka's bankrupt economy, grappling with an economic crisis, has reported positive growth for the first time.

Sri-lankan currency
Official data indicated that Sri Lanka's bankrupt economy, grappling with an economic crisis, has reported positive growth for the first time. | Image:Shutterstock
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Official data indicated that Sri Lanka's bankrupt economy, grappling with an economic crisis, has reported positive growth for the first time. According to a press release from the Department of Census and Statistics (DCS), the year-on-year GDP growth rate for the third quarter recorded a positive growth rate of 1.6 per cent.

Background of Economic Turmoil

In April 2022, Sri Lanka declared bankruptcy, experiencing a staggering minus 8 per cent growth. The economic downturn persisted from the fourth quarter of 2021, leading to a series of challenges for the nation.

IMF's Role and Future Projections

Despite the recent positive growth, the International Monetary Fund (IMF), which released the second tranche of its $2.9 billion bailout, maintains that Sri Lanka's overall growth for 2023 will remain negative. However, projections indicate a shift towards positive growth in the country's economy in 2024.

IMF-Led Reforms and Challenges Ahead

Sri Lanka is currently undergoing a stringent reform regime led by the IMF. President Ranil Wickremesinghe, also the finance minister, emphasizes the necessity of reforms despite facing strong opposition criticism. The ongoing reforms, coupled with a high cost of living, are anticipated to play a crucial role in the island's election year in 2024.

President Wickremesinghe reiterated in Parliament this week that reforms are essential, acknowledging the hardships faced by the public. Sri Lanka, which defaulted on its sovereign debt, continues negotiations with external creditors for concessions on repayment to achieve sustainability—a pivotal aspect of the IMF bailout.

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(With PTI inputs)

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Published December 16th, 2023 at 23:02 IST

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