According to official sources, the Sri Lankan government is halting some structural reforms approved by the International Monetary Fund (IMF) for its economic reform programme due to a lack of political and public support. Revenue administration, expenditure rationalisation, and public pension spending are among the reforms. Officials argue that while these reforms may result in long-term gains, they may also cause social unrest and public agitation. The government’s lack of political strength and political costs make confronting interest groups during upcoming elections difficult.
Sri Lanka’s trade regime is being restructured, including the CPC, CEB, Road Development Authority, and 52 state-owned enterprises. According to the IMF, Sri Lanka can achieve 3.1% economic growth by 2028 if the government meets yearly targets for four years in a row. Reforms are also being considered for foreign investment promotion, import and export sector state institutions, port airports, and aviation institutions.
The BOI and the IMF have established annual revenue and expenditure targets, with the government aiming to attract US$950 million in FDI by 2023. Failure to meet these targets will have serious consequences. The BOI received $211 million in FDI, but the government only met 29% of the 39% target in May and 33% of the target in June. The government must meet 77% of the agreed-upon targets or commitments by September.
