ECONOMYNEXT – Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund, will visit Sri Lanka from June 15 to 16, the central bank said as the country recovers from its first external default.
Gopinath will be the guest of honour at a conference on “Sri Lanka’s Road to Recovery: Debt and Governance”, to be co-hosted by the Ministry of Finance, the Central Bank of Sri Lanka and International Monetary Fund to be held on June 16.
“At the mid-point of the IMF-supported reform programme, the conference aims to reflect upon the lessons learnt from Sri Lanka’s experience in restoring macroeconomic stability, implementing debt restructuring and governance reforms, and to focus on the challenges ahead,” the central bank said.
Gopinath is expected to hold bilateral discussions with the Sri Lankan authorities and several
key stakeholders on the IMF’s engagement with Sri Lanka.
Sri Lanka has gone into serial IMF stand-by programs from mid 1960s as aggressive monetary policy involving liquidity injections through various means including ‘rate cuts’ through open market operations, out of step with the US, blew the balance of payments apart as private credit recovered.
In 2022 Sri Lanka defaulted on external debt without war, Latin America style, after extreme macro-economic policy to push growth up by stimulus (potential output targeting) involving both rate and tax cuts.
Latin American central banks, in Argentina in particular, trigger external defaults purely with monetary policy as rates are targeted with liquidity injections (inflationary policy), in countries with far better fiscal metrics than Sri Lanka.
Sovereign defaults started to proliferate in the 1980s amid extraordinary peacetime currency collapses, after the IMF’s Second Amendment to its Articles left countries with non-clean floating exchange rate regimes without a credible anchor for ‘independent’ monetary policy. (Colombo/June10/2025)
