Sri Lanka's president says the crisis-hit economy is on a path to recovery

"Today we are all benefiting from the results of the patient, committed and focused policies. Inflation that rose to 70% has reduced to 25.2%. Because of this cost of living is gradually coming down. The entire society is feeling the benefits of this," said Wickremesinghe.

In a sign of confidence that the worst of Sri Lanka's financial crisis is over, its central bank earlier in the day surprised markets by cutting interest rates for the first time in three years, signalling a change of course to fuel a rebound in the economy.

The South Asian island republic plunged into crisis last year as its foreign exchange reserves ran out, food and energy prices spiralled and protesting mobs forced the ouster of the country's then-president.

Wickremesinghe took the reins in July and negotiated a $2.9 billion bailout from the International Monetary Fund (IMF) in March.

Inflation, which hit a record high of around 70% in September, is coming down, government revenues are looking up and pressure on the country's balance of payments is easing.

The government aims to complete talks to restructure its bilateral debt with other countries by September.

"Sri Lanka's trade policies have been formulated with a strong protective system. It is the right time to lift those restrictions,'' Wickremesinghe said.

''Most systems have been formulated to discourage investors. We will change that. With that, we will create a country that will be attractive for investors.''

Analysts said with the Central Bank of Sri Lanka (CBSL) having successfully dealt with the runaway inflation, it was turning its attention to growth.

The central bank raised rates by a record 950 basis points last year to tame inflation and by 100 bps on March 3 this year.

The IMF expects GDP to contract by 3% this year after a 7.8% contraction last year. The CBSL has forecast a 2% contraction in 2023.

Reuters