Sri Lanka is on the cusp of a major economic transformation as it prepares to introduce a new law aimed at attracting investors and boosting productivity. The country’s state minister of finance, Shehan Semasinghe, has highlighted the importance of these measures in ensuring Sri Lanka’s economic recovery and sustainable growth.
The Economic Transformation Bill, which has already been approved by the cabinet, will be presented to parliament this week. This legislation will not only align with the targets set under Sri Lanka’s $2.9 billion IMF programme but will also pave the way for crucial reforms in public finance management.
Sri Lanka’s recent default on its foreign debt in May 2022 triggered a severe financial crisis, leading to record-low foreign exchange reserves. However, with the IMF bailout in place, the country’s economy is showing signs of improvement and is projected to grow by 3% this year. The new law aims to reinforce this recovery by legalizing key IMF targets, such as reducing the debt to GDP ratio and debt servicing costs.
As Sri Lanka gears up for presidential elections, potential shifts in government policies on taxation and IMF targets could be on the horizon. Opposition parties have hinted at a review of the current administration’s strategies, signaling a potential change in economic trajectory. Despite the challenges ahead, the implementation of the Economic Transformation Law is crucial for steering Sri Lanka towards sustainable growth and financial stability.
Sri Lanka’s Economic Transformation Law represents a critical step towards reviving the country’s economy and attracting much-needed investments. By aligning with IMF targets and implementing key reforms, Sri Lanka has the potential to overcome its current financial challenges and emerge stronger in the global economic landscape. It is imperative for policymakers to navigate these changes effectively and ensure that the benefits of this law trickle down to all sectors of society.