A staff team from the International Monetary Fund (IMF) led by Manuela Goretti visited Colombo during January 29 – February 7, 2020 to meet with the new administration and discuss its policy agenda. At the conclusion of the staff visit, Ms. Goretti issued the following statement:

“The IMF staff team had constructive discussions with the Sri Lankan authorities on recent economic developments and the country’s economic reform agenda. Given the high level of public debt and refinancing needs in the country, ensuring macroeconomic stability calls for fiscal consolidation, prudent monetary policy, and sustained efforts to build international reserves. Ambitious structural and institutional reforms remain critical to raise the country’s growth potential and promote inclusiveness.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 29 January 2020, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 50 basis points to 6.50 per cent and 7.50 per cent, respectively. The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as the global economy. This decision supports a continued reduction in market lending rates, thereby facilitating the envisaged recovery in economic activity given the favourable medium term outlook for inflation, which is well anchored within the 4-6 per cent range.