Sri Lanka's Economic Recovery: Challenges and Prospects
Sri Lanka’s economic recovery is ongoing but incomplete, with issues such as elevated poverty and below pre-crisis growth levels. The World Bank emphasizes the need for structural reforms and efficient public spending. Supported by an IMF bailout, Sri Lanka is advised to encourage private sector investment to bolster development.
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- Sri Lanka
The World Bank has noted that while Sri Lanka's economic performance has improved, the recovery is not yet complete. Growth remains below levels seen before the crisis, and poverty is considerably high. Continued macroeconomic stability, urgent structural reforms, and more efficient public spending are deemed necessary for a stronger recovery.
Sri Lanka's economy experienced a significant downturn in 2022 due to a foreign exchange crisis exacerbated by the COVID-19 pandemic and flawed political and economic management since 2019. Aiding in recovery is a four-year IMF bailout amounting to nearly USD 3 billion, contingent upon implementing stringent reforms.
Despite recent progress, challenges abound. Food costs remain elevated, and reserve accumulation has slowed. The World Bank predicts 4.6% growth by 2025 but stresses the role of private sector investment in creating jobs and ensuring every rupee is well-utilized, to support sustainable growth and reduce poverty.
(With inputs from agencies.)
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