IMF warns of trade threats to SL’s growth
- By KirshCNL
- July 22, 2025
- Banking and Financial, News, Political
- IMF, Sri Lanka, US tariff
- 0 Comments
Sri Lanka’s economy is expected to grow by 3.5% this year, after recording 5% growth last year, according to the World Bank, showing signs of steady recovery from the 2022 financial crisis.
However, the International Monetary Fund (IMF) warns that global trade issues, especially with the United States could slow down that progress.
In a statement issued after completing its fourth review under the $2.9 billion loan programme, the IMF said Sri Lanka’s economic outlook remains positive, but cautioned that uncertainties in global trade policy pose risks to the country’s economic and social stability.
A major concern is the 44% U.S. import tariff recently imposed on about $3 billion worth of Sri Lankan exports. Although the full tariff has been temporarily suspended for three months, a 10% base tariff still applies, similar to the rate faced by most other countries.
Evan Papageorgiou, IMF Mission Chief for Sri Lanka said that if these trade shocks continue, Sri Lankan authorities should work closely with the IMF to adjust policies as needed. He emphasised the importance of strictly following the reform programme. The IMF chief also noted that finalising debt restructuring deals with official and private creditors remains crucial. Sri Lanka reached a preliminary agreement last year to restructure $22.5 billion in foreign debt, including $4.75 billion owed to China.
According to him, the Central Bank should continue prioritising price stability, and the government’s upcoming 2026 budget will play a key role in continuing the recovery and maintaining IMF support.
