Sri Lanka’s partnership with the International Monetary Fund has been a lifeline during a period of extraordinary economic turbulence. The US$2.9 billion Extended Fund Facility, agreed upon in 2023, helped anchor macroeconomic stabilization, restore some degree of investor confidence, and push long-overdue structural reforms into motion. As the country enters the later stages of this program, attention must now shift from survival to sustainability. What happens after the IMF leaves will determine whether Sri Lanka merely postponed its crisis or permanently changed course.
The IMF has commended Sri Lanka’s progress in fiscal consolidation, inflation control, and foreign reserve accumulation. Revenue collection has improved, interest rates are more predictable, and the rupee has remained relatively stable. These are notable achievements given the scale of the collapse in 2022. But they are not an endpoint. Many of the reforms adopted under IMF guidance have yet to be institutionalized. Tax policy remains politically sensitive. State-owned enterprises are still inefficient. And anti-corruption frameworks, though legislated, are inconsistently enforced. These are not technical failures. They are governance challenges. Without political will and bipartisan commitment, they may unravel the moment external pressure is lifted.
Sri Lanka’s economic vulnerabilities remain structurally rooted. Import dependence continues to dominate the trade balance. Export diversification is minimal. The private sector, while gradually recovering, is still risk-averse and heavily reliant on government-linked contracts. Public sector debt is down from its peak but still burdens future generations with high repayment obligations. The temptation to return to short-term borrowing and populist spending remains strong, especially in the run-up to elections. In such a landscape, the post-IMF transition must be handled with precision, discipline, and long-range thinking.
Countries that have successfully exited IMF programs, such as Ireland and South Korea, did so by embedding reform into national consensus. They built institutions capable of oversight and made policy continuity part of their political culture. Sri Lanka must study these examples carefully. It needs an independent fiscal council, a results-based public investment framework, and a clearly communicated national economic strategy that outlasts electoral cycles. These are not radical ideas. They are the foundation for credible self-governance in the global economy.
There is also a role for civil society and the media in this phase. Transparency, accountability, and public engagement must not decline with the departure of international monitors. Citizens have a right to know where their taxes go, how public enterprises are managed, and whether procurement is competitive. The end of the IMF program should not mark the end of scrutiny. It should mark the beginning of ownership.
The real success of the IMF engagement will not be judged by what was stabilized but by what was reimagined. Bailouts are temporary. Blueprints must be permanent. For Sri Lanka to move forward, the state must become not just solvent but smart. Growth must be more than a rebound. It must be a redirection. The challenge ahead is not one of scarcity, but of strategy.
