The World Bank report titled The Sri Lanka Update published on 10th October 2024 stated that Sri Lanka’s economy has stabilized owing to four consecutive quarters of growth driven by the industrial and tourism sectors and supported by critical structural and policy reforms. The report further held that growth was expected to reach 4.4 percent in 2024, surpassing earlier forecasts. The country defaulted on its foreign debt for the first time ever in May 2022, engulfed in a severe crisis and struggling under its high debt burden and near empty foreign exchange reserves.
The announcement came after, the Sri Lankan Administration saw a complete overhaul on the 22nd September 2023 with a new President and a new Cabinet taking office bringing a new uncertainty to the country’s progress. Sri Lanka had successfully executed Debt restructuring Agreements with the Official Creditor Committee (“OCC”) in June this year followed by the announcement that Sri Lanka had reached agreements in principle on the restructuring of approximately 14.2 billion US dollars of sovereign debt with international sovereign bond (ISB) holders and also finalized an agreement with China Development Bank. The two groups collectively hold in excess of 50 percent of the bonds, according to the Treasury. This was a significant step in Sri Lanka’s debt restricting process in line with the IMF Programme.
A high level delegation from the IMF visited Sri Lanka in the first week of October to meet with the new Government for the first time and expressed their appreciation for the changes taking place boosting the positive outlook on the island’s economic recovery.
