“IMF Revises Sri Lanka 2025 Reserves amid Policy Concerns”

The International Monetary Fund has lowered Sri Lanka’s 2025 Net International Reserves projection to $2.16 billion, down from an earlier estimate of $2.73 billion, signaling potential pressure on the country’s debt repayment capacity. Analysts attribute the revision to recent pro-cyclical rate cuts and rapid private credit growth, which limit the central bank’s ability to accumulate foreign currency.

Experts warn that without stronger deflationary measures and independent Treasury action, Sri Lanka risks repeating past debt crises. Recommended corrective steps include establishing a dollar purchasing desk within the Treasury, allowing it to levy dollar taxes, and transferring central bank profits in foreign currency to reduce reliance on rupee issuance.

Policymakers face growing pressure to act decisively. If structural reforms are delayed, reserve shortfalls could accelerate currency depreciation, strain the IMF program, and jeopardize debt repayment, leaving the government exposed to economic and political backlash.

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