Director of Asia and Pacific Department of the International Monetary Fund (IMF) Krishna Srinivasan speaks during a press conference in Colombo on May 15, 2023. (PHOTO / AFP)

COLOMBO — Sri Lanka's economy is showing tentative signs of improvement, partly due to the implementation of critical policy actions, according to a statement from the International Monetary Fund (IMF) sent to local media on Friday.

The economic recovery remains challenging, and it is essential to continue the reform momentum under strong ownership by both the authorities and the Sri Lankan people, said IMF Deputy Managing Director Kenji Okamura in the statement following his visit to Sri Lanka.

During IMF Deputy Managing Director Kenji Okamura's visit, he discussed with officials the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability

Okamura said he welcomes Sri Lanka's strong commitment to implement their ambitious economic program that aims to achieve macroeconomic stabilization, restore debt sustainability, safeguard financial stability, strengthen governance, and protect the vulnerable.

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The current economic crisis has its genesis in policy missteps aggravated by external shocks, he said.

During his visit, he discussed with officials the importance of fiscal measures, in particular revenue measures, for a return to macroeconomic stability.

"I was encouraged by the authorities' commitment to negotiate a debt strategy in a timely and transparent manner. Continued open dialogue with the creditors will help to reach restructuring agreements to restore debt sustainability in line with the program targets," he said.

As Sri Lanka navigates its way through the economic crisis, it remains imperative to protect the poor and the most vulnerable that have been disproportionately affected by the crisis, Okamura said.

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The IMF in March this year approved a 48-month extended arrangement under the Extended Fund Facility of about $3 billion to support Sri Lanka's economic policies and reforms.