Sri Lanka’s external sector demonstrated a modest performance in January 2017. During the month, the trade deficit widened as a result of increased import expenditure and a decline in export earnings. However, foreign currency receipts in terms of earnings from tourism recorded a relatively high growth in January 2017 while workers’ remittances grew at a moderate rate, year–on-year. The government securities market and the Colombo Stock Exchange (CSE) witnessed net outflows during January 2017.

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The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the findings so far, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

• The staff-level agreement is subject to the completion of a prior action by the authorities and the approval of the IMF Executive Board, which is expected to be considered in June 2017.
• The new Inland Revenue Act should pave the way for a durable fiscal consolidation.
• Maintaining the reform momentum in an uncertain external environment is important for addressing fiscal and external vulnerabilities.

After constructive discussions with the authorities during the visit to Colombo in March, and more recently during the Spring Meetings, an IMF staff team issued the following statement in Washington DC: