📈 Avoiding the 2027 IMF Cliff: Strategy for Sustainable Growth

Sri Lanka faces a critical juncture as it prepares for the conclusion of IMF support in 2027. To prevent a "cliff fall" fiscal shock, the focus must shift from basic stabilization to deep structural transformation. • Strategic Focus: Transitioning from crisis management to a resilient, export-led economy to generate stable FX and quality employment. • Export Diversification: Urgent need to move beyond traditional tea and apparel & textiles. Growth must be driven by ICT/BPM, high-value manufacturing, logistics, and agri-processing. • Fiscal & SOE Reform: • Revenue growth via a broader tax net rather than ad-hoc levies. • Restructuring loss-making state-owned enterprises (SOEs) in energy and transport to reduce the drain on public finances. • Investment & Productivity: • Enhancing human capital to combat brain drain and skill mismatches. • Attracting FDI by reducing red tape and ensuring policy consistency. • Transitioning to renewable energy (solar, wind) to lower the trade deficit and energy costs. • Governance: Strengthening the rule of law and transparency is deemed a prerequisite to maintaining investor trust and avoiding a repeat cycle of bailouts.