IMF First Deputy Managing Director tells Sri Lanka

Sri Lanka’s long and difficult journey from economic collapse to cautious recovery reached a critical milestone as President Anura Kumara Dissanayake, IMF First Deputy Managing Director, Dr. Gita Gopinath, and Central Bank Governor Dr. Nandalal Weerasinghe addressed the high-profile “Sri Lanka’s Road to Recovery: Debt and Governance” conference yesterday in Colombo.

The event, jointly organized by the Central Bank of Sri Lanka (CBSL), the Ministry of Finance and the International Monetary Fund (IMF), underscored the urgency of sustaining reform momentum while opening a new chapter in the country’s 75-year partnership with the IMF.

With macroeconomic stability returning but fragility still looming, the message from all three leaders was clear: Sri Lanka cannot afford to backslide.

“This must be the last IMF programme for Sri Lanka, Dr. Gopinath stated firmly in her keynote speech. “We’ve had 16 before this—about half ended prematurely. Reform fatigue, policy reversals and lost discipline cannot be repeated. This time must be different.”

While the conference primarily focused on public financial management, debt sustainability, and governance, the implications for Sri Lanka’s business environment were unmistakable. According to Gopinath, structural reforms, transparent fiscal management and improved governance are not abstract policy ideals — they are the essential foundations for restoring investor confidence, revitalizing private enterprise and building a resilient economy.

“Comprehensive governance reform can raise GDP by over 7% and reduce debt-to-GDP by more than six percentage points over the next decade, Gopinath noted, citing IMF internal analysis. “These are not just theoretical benefits — they are real, measurable returns for the private sector, job creation, and inclusive growth.”

Dr. Weerasinghe echoed this sentiment, stating that the IMF-supported programme “has laid the groundwork for macroeconomic fundamentals essential for sustained growth. He emphasized that Sri Lanka’s financial institutions and monetary authorities are now better equipped to support private sector-led recovery, pointing to a stabilizing rupee, single-digit inflation and restored investor interest.

“With improved credit ratings and Sri Lankan bonds being re-included in global indices, capital markets are beginning to show signs of life, said Dr. Weerasinghe. “This creates a platform for increased foreign direct investment (FDI), trade expansion, and domestic entrepreneurial activity.”

President Dissanayake opened the conference with a stark reminder of the human cost of Sri Lanka’s economic collapse. He called for economic leadership that not only addresses balance sheets but also rights wrongs of the past.

“We lost three critical things — one in our economy, two in our country, and three in our people, he said. “We must recover what was lost. And we can only do that through trust, transparency and inclusive policies.”

Dissanayake acknowledged the sacrifices made by the public — especially the most vulnerable — and emphasized that public buy-in is essential to the success of reform. “The people of this country have already shown their willingness to endure hardship in service of recovery. It is now the responsibility of government and institutions to ensure that their sacrifices are not in vain.”

His words carried weight in a country where memories of fuel queues, food shortages and economic despair remain fresh. The President signaled his administration’s commitment to a social contract grounded in accountability and economic fairness.

Gopinath noted that:

USD 3 billion in external debt was forgiven.

USD 25 billion was restructured with longer maturities and lower interest rates.

External debt servicing was reduced by half over the next decade.

Debt-to-GDP ratios are expected to fall by 27 to 34 percentage points.

“Sri Lanka’s experience has helped us sharpen how we approach debt sustainability, creditor coordination and domestic financial sector resilience, said Gopinath. “It’s a case study in how complex, painful, but ultimately successful restructuring can be done.”

By Ifham Nizam