Sri Lanka's beleaguered economy, grappling with a bankruptcy declaration in April 2022, has shown signs of recovery with a remarkable uptick in growth, marking a significant milestone since the economic crisis hit the island nation.
Official data released by the Department of Census and Statistics (DCS) unveiled a promising year-on-year GDP growth rate of 1.6 per cent for the third quarter, indicating a noteworthy shift towards positive economic momentum, as stated in a recent press release on Friday.
The island nation had previously encountered a substantial setback, registering a staggering minus 8 per cent growth at the time of its bankruptcy declaration. This economic downturn persisted from the fourth quarter of 2021, further exacerbating the financial woes.
The International Monetary Fund (IMF), which recently disbursed the second tranche of its USD 2.9 billion bailout package, has projected a continued negative growth trajectory for Sri Lanka throughout 2023. However, a positive outlook emerges on the horizon for 2024, with anticipated growth prospects.
President Ranil Wickremesinghe, concurrently serving as the finance minister, remains steadfast in advocating for reforms amidst stern opposition criticism. Emphasizing the necessity of these reforms despite the hardships endured by the public, Wickremesinghe affirmed their essential role in steering the country's economy back on track.
The ongoing stringent reform regime, aligned with IMF guidelines, converges with soaring living costs, forming a significant backdrop for the forthcoming 2024 elections in Sri Lanka. Analysts foresee these economic circ*mstances as pivotal factors shaping the political landscape in the election year.
Wickremesinghe underscored the indispensability of reforms during a parliamentary session this week, acknowledging the challenges faced by citizens but reaffirming their crucial role in securing the nation's financial stability.
Sri Lanka, grappling with a sovereign debt default, remains engaged in negotiations with external creditors, striving to secure concessions on repayment terms as part of the overarching strategy towards achieving sustainable economic stability—an integral aspect of the ongoing IMF bailout discussions.
