It was important for Sri Lanka to restructure its debt and relax import restrictions by the end of this year, Sri Lankan High Commissioner to India, Milinda Moragoda told News First in an interview on Thursday night.

Sri Lanka had suspended its external debt repayments and the import of many goods, which are against some agreements the country has signed, and the international community had allowed it to do so because it had entered into an agreement with the IMF, he said.

“We have not imported many items for two or three years. We can’t go on like this. Our economy has shrunk significantly in the last 18 months. We are witnessing the beginning of economic stabilisation. The Central Bank is working on keeping interest rates at a level that won’t trigger

inflation. The value of the rupee is determined in a controlled environment. Things are in a flux,” he said.Moragoda said that reducing demand was an integral part of stabilisation. “However, this is easier said than done as it is a painful process.”

“The demand for fuel has dropped. This was done in a somewhat artificial manner. However, when we recover, we will face new challenges. I think we can only leave this controlled environment by the end of the year. Then we will see what the real value of the rupee is, we will see what the market determined interest rates would be. Until then the government is trying to stabilize the economy with IMF help,” he said.

Moragoda said that the country also needs economic growth. The expected economic growth for 2024, is about 1.4 percent, he said. Given that the economy has shrunk over 10 percent in the last 18 months, this would not account for much, Moragoda said.

“We need to create new jobs,” he added.