AFP, Colombo :
Sri Lanka’s painful austerity measures were “bearing fruit” and must be sustained, the International Monetary Fund said Friday as the country’s new president sought changes to its $2.9 billion bailout.
Leftist leader Anura Kumara Dissanayake won last month’s presidential election promising to reverse steep tax hikes, raise public servant salaries and renegotiate an unpopular IMF bailout secured by Colombo last year.
The avowed Marxist held his first meeting with Fund representatives in Colombo this week, saying he wanted to reduce the tax burden on lower income households.
In response, the Washington-based lender of last resort stressed that it was important not to jeopardise Sri Lanka’s hard-won economic recovery.
“Reform efforts are bearing fruit in terms of reviving economic growth, lowering inflation, boosting reserves and improving revenue mobilisation,” spokesperson Julie Kozack said in Washington.
“Important vulnerabilities and uncertainties do remain, and this means that sustaining reform momentum is critical.”
Sri Lanka can draw down a fourth tranche of $336 million in IMF funds only if it is satisfied that leaders are sticking to the revenue and spending targets of the rescue plan.
Dissanayake’s office said Thursday he reaffirmed “broad agreement” with the objectives of the IMF programme but “emphasised the importance of achieving these objectives through alternative means that relieves the burden off the people”.