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The IMF is set to discuss the timing of Sri Lanka's next program review with the new administration under President Dissanayake, expressing eagerness to work with the new leadership in building on the country’s recovery efforts since the 2022 crisis. Sri Lanka has achieved key program targets, such as foreign reserves, and received funds from the Asian Development Bank, though a new staff-level agreement and a budget aligned with IMF targets are still required. Analysts highlight the long-standing economic issues tied to inflationary monetary policies, forex shortages, and the central bank's reserve management, which have led to balance of payments deficits, rising foreign debt, and eventual default. Since late 2022, the central bank has adopted deflationary policies to stabilize the balance of payments and reduce outflows.
