COLOMBO, July 25 (Xinhua) -- The Sri Lankan authorities' economic reform program is yielding commendable outcomes with real GDP growing by 4.8 percent year-on-year in the first quarter of 2025, outperforming expectations, Evan Papageorgiou, mission chief of the International Monetary Fund (IMF) for Sri Lanka, said on Friday.
He said headline inflation was at -1.1 percent year-on-year in the second quarter of 2025 and is gradually returning to target. Gross international reserves stood at 6 billion U.S. dollars at the end of June, while tax revenue collection continued improving, supported by strong performance in VAT and taxes on imported motor vehicles.
He said that while the economic outlook is positive, downside risks have increased on the back of potentially high tariffs on Sri Lanka's exports, persistent trade policy uncertainty, and heightened geopolitical tensions.
He said that maintaining macroeconomic stability requires sustained efforts to raise fiscal revenues. To continue meeting the medium-term primary balance objective of 2.3 percent of GDP, the 2026 budget should be underpinned by strong revenue measures and appropriate spending allocations, consistent with program parameters. ■
