IMF: Sri Lanka’s Governance Reforms Key to Economic Recovery

COLOMBO (News 1st): The IMF has praised Sri Lanka for making significant strides in strengthening governance and advancing its anti-corruption agenda, aligning with key benchmarks under the IMF’s Extended Fund Facility (EFF) program.

Martha Woldemichael, IMF Representative in Sri Lanka, highlighted several legislative milestones, including the enactment of laws to safeguard the independence of the Central Bank, improve public financial management, and strengthen the legal framework for anti-corruption through the Anti-Corruption Act.

In 2023, Sri Lanka became the first country in Asia to undergo the IMF’s Governance Diagnostic Assessment, a comprehensive evaluation aimed at identifying vulnerabilities and recommending reforms. Many of these recommendations have since been embedded into the IMF-supported program.

Among the reforms cited were:

- Mandatory publication of public procurement contracts
-Disclosure of firms receiving tax exemptions
-Enactment of the Asset Recovery Law, a structural benchmark successfully met by the government

Woldemichael also noted the release of a governance reform action plan in February, which aligns closely with the IMF’s diagnostic recommendations. Looking ahead, she emphasized the importance of sustained implementation, particularly in areas such as:

-Strengthening the asset declaration system
-Reforming the tax exemptions framework
-Enhancing anti-money laundering and counter-terrorism financing (AML/CFT)
-Advancing anti-corruption measures at customs
Improving procurement processes to reduce revenue leakages