Sri Lanka is set to unveil a new economic transformation law that aims to attract investors and boost productivity, as stated by the country’s state minister of finance. The law, approved by the cabinet and backed by the IMF, will be presented to parliament this week, signaling a crucial step towards sustainable growth and recovery for the country.
The Economic Transformation Bill, along with the Public Finance Management bill, will lay the groundwork for achieving targets set under Sri Lanka’s $2.9 billion IMF programme. These measures are essential in ensuring that Sri Lanka can overcome its financial crisis and return to a path of healthy economic growth.
Road to Recovery
Sri Lanka faced its worst financial crisis in over seven decades, triggered by a default on foreign debt in May 2022. However, with the IMF bailout and the implementation of new economic legislation, the country is slowly but steadily making progress. The economy is projected to grow by 3% this year, marking a positive shift from the turmoil faced in recent times.
Legalizing IMF Targets
One of the key aspects of the Economic Transformation bill is the legalization of IMF targets, including reducing the debt to GDP ratio to 95% by 2032 and bringing down debt servicing costs to 4.5% of GDP by 2027. These targets are crucial in ensuring financial stability and sustainable growth for Sri Lanka in the long term.
As Sri Lanka prepares for presidential elections before mid-October, there is anticipation regarding potential shifts in government policies. Opposition parties have hinted at reviewing taxation and IMF programme targets if they come into power, signaling a possible change in direction for the country’s economic reforms.
Sri Lanka’s journey towards economic transformation is poised at a critical juncture with the introduction of new legislation aimed at revitalizing the economy. The country’s efforts to attract investors, increase productivity, and meet IMF targets are crucial steps in ensuring a sustainable path to growth and recovery. With continued focus and determination, Sri Lanka has the potential to emerge stronger from its current challenges and set a solid foundation for a prosperous future.