Sri Lanka Must Reform to Mitigate Impact of US Tariffs

COLOMBO (News 1st): The International Monetary Fund has stressed on the the urgent need for Sri Lanka to address the economic challenges posed by recent U.S. tariffs. 

Evan Papageorgiou, the IMF Mission Chief for Sri Lanka speaking at a virtual press conference on Tuesday (29) said that the Sri Lankan authorities are committed to achieving program objectives and addressing any deviations from targets with remedial measures. He assured that the IMF takes this commitment seriously and recognizes strong indicators for delivering on these objectives.

On April 25th, IMF staff and the Sri Lankan authorities reached staff-level agreement on economic policies to conclude the Fourth Review of Sri Lanka’s reform program supported by the IMF’s Extended Fund Facility.

The fourth review of the IMF program provided an opportunity to assess economic developments, review program targets, and determine the reform agenda for the period ahead.

This review coincided with a significant trade policy shock, specifically the 44% tariff on Sri Lankan exports announced on April 2nd.

Evan Papageorgiou, the IMF Mission Chief for Sri Lanka said that the apparel and rubber industries, which account for a substantial share of Sri Lanka's exports to the U.S., are expected to be heavily impacted. These sectors employ a large number of workers, with the apparel industry alone employing over 320,000 workers.

He stressed on the importance of continuous reforms and exploring additional ways to make Sri Lankan exports more marketable and appealing to a wider range of trade partners.