Sri Lanka would have needed revised IMF programme if 44% US tariff had stayed – CBSL Governor

The Colombo Stock Exchange (CSE), in collaboration with the Securities and Exchange Commission of Sri Lanka (SEC) and the stock broking industry, successfully hosted the Invest Sri Lanka Investor Forum in Singapore today (12), where Central Bank Governor Dr. Nandalal Weerasinghe said that the recent reduction of US tariffs on certain exports has spared Sri Lanka from significant economic adjustments, including a potential revision of its IMF programme.

Speaking during a panel discussion, Dr. Weerasinghe described the US tariff as an "unexpected external shock," similar in nature to the pandemic. He noted that the initial 44% tariff rate had raised serious concerns, stating, “If the 44% rate had been maintained, we would have required a different economic outlook and potentially a revised IMF programme.”

He explained that negotiations brought the rate down to 20%, a level he considered “much more comfortable” for Sri Lanka. The Governor added that this reduction now gives the country a competitive advantage over regional rivals such as India and China, particularly in its key export markets in the US and EU.

Dr. Weerasinghe also pointed to the potential for trade diversion to benefit Sri Lankan exporters and emphasised that the current situation does not warrant the use of monetary, fiscal, or reserve buffers. However, he cautioned that the global trade environment remains unpredictable, and the country must be prepared to respond quickly to any changes in US policy.