Colombo: The Asian Development Bank (ADB) has said that "uncertainty" over the impending elections in Sri Lanka will lead to a possible deterioration in the country's economic outlook.
Presidential elections are scheduled to be held in the island nation in the last quarter of this year, while parliamentary elections are scheduled for the middle of next year.
However, political uncertainty remains in the country as the opposition party has promised to reverse existing IMF-related reforms, which have proven unpopular among the public.
President Ranil Wickremesinghe, who has led the recovery program by striking a bailout deal with the International Monetary Fund (IMF) for a US$2 billion facility, says the island faces a crisis if reforms in the IMF program are not followed through. The economy may have to face collapse again. To.Underscoring the economic risks facing Sri Lanka, ADB said in its South Asia Chapter's Economic Trends Report released yesterday, "Foremost among them is the uncertainty associated with the upcoming elections, including fiscal policy and reform implementation. But also includes the potential impact.”
ADB noted that there are signs of economic recovery in Lanka and emerging growth that has revived in the second half of 2023 and is expected to continue through 2024 and 2025.
“Inflation slowed to single digits last year after peaking in 2022 and will remain below 10 percent in 2024 and 2025. Challenges remain and the reforms needed to address the recent economic crisis should not be delayed in the upcoming election cycle. The report said Sri Lanka needs to address vulnerability to poverty to ensure inclusive growth.It has been two years since Sri Lanka declared its first sovereign debt default. Talks on debt restructuring are ongoing.
"Delays in completion of the debt restructuring agreement and any hurdles in passing key legislation could weigh on sentiments and derail growth," the report warned.
The IMF said in March that it had reached a staff-level agreement with Sri Lanka for the next phase, enabling it to access US$337 million of the nearly US$3 billion bailout approved in 2023 for the island nation. Will do.
Two tranches of US$330 million were released in March and December 2020, while the global lender praised Colombo for macroeconomic policy reforms it said were "starting to bear fruit".
Presidential elections are scheduled to be held in the island nation in the last quarter of this year, while parliamentary elections are scheduled for the middle of next year.
However, political uncertainty remains in the country as the opposition party has promised to reverse existing IMF-related reforms, which have proven unpopular among the public.
President Ranil Wickremesinghe, who has led the recovery program by striking a bailout deal with the International Monetary Fund (IMF) for a US$2 billion facility, says the island faces a crisis if reforms in the IMF program are not followed through. The economy may have to face collapse again. To.Underscoring the economic risks facing Sri Lanka, ADB said in its South Asia Chapter's Economic Trends Report released yesterday, "Foremost among them is the uncertainty associated with the upcoming elections, including fiscal policy and reform implementation. But also includes the potential impact.”
ADB noted that there are signs of economic recovery in Lanka and emerging growth that has revived in the second half of 2023 and is expected to continue through 2024 and 2025.
“Inflation slowed to single digits last year after peaking in 2022 and will remain below 10 percent in 2024 and 2025. Challenges remain and the reforms needed to address the recent economic crisis should not be delayed in the upcoming election cycle. The report said Sri Lanka needs to address vulnerability to poverty to ensure inclusive growth.It has been two years since Sri Lanka declared its first sovereign debt default. Talks on debt restructuring are ongoing.
"Delays in completion of the debt restructuring agreement and any hurdles in passing key legislation could weigh on sentiments and derail growth," the report warned.
The IMF said in March that it had reached a staff-level agreement with Sri Lanka for the next phase, enabling it to access US$337 million of the nearly US$3 billion bailout approved in 2023 for the island nation. Will do.
Two tranches of US$330 million were released in March and December 2020, while the global lender praised Colombo for macroeconomic policy reforms it said were "starting to bear fruit".
