ECONOMYNEXT – Sri Lanka’s President Anura Dissanayake has met a visiting International Monetary Fund delegation for the second day.
“President Dissanayake aims to achieve the objectives of the program in partnership with the IMF, seeking alternative approaches that will alleviate the burden on the citizens,” a statement issued after the second meeting said.
“The required cordial and good environment was built between the two sides and the three days of talks concluded successfully.
Sri Lanka’s citizens were hit with the worst currency collapse in the history of the central bank after extreme macro-economic policy involving both rate cuts (money printing) and tax cuts to boost potential output, which ended in sovereign default.
The IMF itself gave technical assistance to calculate potential output.
Sri Lanka then had to hike rates and shrink economic activity to restore confidence in the money monopoly of the central bank and hike taxes steeply to get revenue to pay salaries and other expenses.
After macro-economists collapsed the currency, many people could not make ends meet and also eat and they had to be given income support from the collected taxes. (Colombo/Oct04/2024)