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IMF reaches staff-level agreement on first review of Sri Lanka’s Extended Fund Facility arrangement

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IMF staff and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the first review of the 48-month EFF-supported programme. Sri Lanka will have access to SDR 254 million (about 330 million U.S Dollars) in financing once the review is approved by the IMF Management and IMF Executive Board.

Macroeconomic policy reforms are starting to bear fruit and the economy is showing tentative signs of stabilization. Sustaining the reform momentum and addressing governance weaknesses and corruption vulnerabilities are critical to put the economy on a path towards lasting recovery and stable and inclusive growth.

Completion of the review by the IMF’s Executive Board requires: (i) the implementation by the authorities of all prior actions; and (ii) the completion of financing assurances reviews.

After constructive discussions with the authorities in Colombo and during the Annual Meetings in Marrakech, Morocco, IMF Senior Mission Chief for Sri Lanka, Peter Breuer, and Deputy Mission Chief, Katsiaryna Svirydzenka, issued the following statement:

“The IMF team reached a staff-level agreement with the Sri Lankan authorities on the first review under an economic reform programme supported by a 48-month Extended Fund Facility (EFF) arrangement . The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

“The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board in the period ahead, contingent on: (i) the implementation by the authorities of all prior actions; (ii) the completion of financing assurances reviews, which will include confirming whether adequate progress has been made with debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the programme’s debt targets.

“Upon approval by the IMF Executive Board, Sri Lanka would have access to SDR 254 million (about US$330 million), bringing the total IMF financial support disbursed under the arrangement to SDR 508 million (about US$660 million).

“The authorities remain committed to the ambitious reform agenda under the EFF and their reform efforts have been commendable, including rapid disinflation and a significant fiscal adjustment expected by the end of this year. Program performance at end-June was satisfactory, with all quantitative performance criteria for end-June met, except the one on expenditure arrears. All indicative targets were also met except the one on tax revenues. Most structural benchmarks were either met or implemented with delay by end-September 2023. Notably, the authorities published on time the Governance Diagnostic Report. Sri Lanka is the first country in Asia that has undergone the IMF Governance Diagnostic exercise. Progress is still ongoing on the revenue measures to support the fiscal consolidation during 2024 in line with programme parameters.

“The economy is showing tentative signs of stabilization. Inflation is down from a peak of 70 percent in September 2022 to 1.3 percent in September 2023, gross international reserves increased by $1.5 billion during March-June this year, and shortages of essentials have eased. Despite these early signs of stabilization, full economic recovery is not yet assured. Growth momentum remains subdued, with real GDP in the second quarter contracting by 3.1 percent on a year-on-year basis and high-frequency economic indicators continuing to provide mixed signals. Sri Lanka’s external position has weakened as a result of prolonged debt restructuring discussions, and reserve accumulation has slowed in recent months. Agreeing on debt treatments consistent with restoring debt sustainability quickly will be key to resolving uncertainty that is constraining Sri Lankan businesses and external financing.

“Sustaining the reform momentum is of paramount importance in steering the economy towards a sustained recovery and fostering stable, inclusive economic growth. We welcome the authorities’ commitment to increase revenues and signal better governance by adopting needed tax measures, strengthening tax administration, and actively eliminating tax evasion.

Maintaining cost recovery in fuel and electricity pricing helps mitigate fiscal risks arising from state-owned enterprises. Further strengthening the social safety net remains critical to protect the poor and the vulnerable. While inflation has decelerated faster than expected, continued monitoring is warranted to help anchor inflationary expectations and support macroeconomic stability. Against continued external uncertainty, it remains important to rebuild external buffers through strong reserves accumulation.

“Following the authorities’ domestic debt operation, the critical next step is to secure an agreement with official creditors on a debt treatment consistent with the IMF Executive Board-approved program parameters and debt targets. We have taken note of a tentative agreement between Sri Lanka and the Export-Import Bank of China and look forward to analyzing the details when we receive them.

We urge all official creditors to move forward and agree on an appropriate debt treatment in line with the financing assurances they provided. We understand negotiations between commercial creditors and Sri Lanka are ongoing and emphasize the need to restore debt sustainability in a robust manner. Delays risk worsening the economic outlook for Sri Lanka, widening its financing gaps, hindering its return to sustainable growth, and thereby reducing its capacity to repay.

“The authorities’ commitment to implement key recommendations of the recently published Governance Diagnostic Report is a welcome step. Concrete steps towards addressing corruption risks and strengthening accountability will be essential for rebuilding economic confidence and making growth more robust and inclusive.

“The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Central Bank Governor Dr. P. Nandalal Weerasinghe, State Minister Shehan Semasinghe, Secretary to the Treasury K.M. Mahinda Siriwardana, and other senior government and CB officials. The IMF team also met with Parliamentarians, representatives from the private sector, civil society organizations, and development partners”.



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Sri Lanka cricket finances ‘greater than feared’: interim chief

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Eran Wickramaratne gestures during a press conference at the Sri Lanka Cricket Board office in Colombo on May 21 (Ishara S. KODIKARA/AFP)

(AFP)Financial irregularities surrounding Sri Lankan cricket were far worse than feared, government-appointed administrators said Thursday, promising a full accounting and sweeping reforms.

“We have already ordered a forensic audit of the accounts,” Eran Wickramaratne, interim president of Sri Lanka Cricket (SLC), told his first news conference since taking office last month.

He said financial irregularities were “far greater than initially feared”.

He said the new SLC leadership — handpicked by the government of President Anura Kumara Dissanayake — would bring in sweeping reforms as concerns linger over international sanctions.

The current administration was appointed following the mass resignation of SLC’s elected officials last month — a move that raised fears of possible suspension by the International Cricket Council (ICC) over political interference.

The SLC, the country’s richest sports body, was suspended for two months in 2023 on similar grounds.

Wickramaratne, however, said discussions with the ICC were underway on reforming the SLC.

“Our talks with the ICC have been extremely cordial and constructive,” he said.

“We have been very open and transparent in what we are doing, and they want us to pursue open and transparent methods in doing this.”

Reforms include drafting a new constitution aimed at curbing abuses that allowed groups to retain power for a prolonged period, he added.

Four-time SLC president Shammi Silva and his entire committee stepped down in April after the government intervention, clearing the way for the current overhaul.The previous administration had also faced criticism over the national team’s performances, including an early exit from the T20 World Cup, which Sri Lanka co-hosted with India earlier this year.

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Police roll out countrywide security plan for Vesak Week

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The Police have announced a special islandwide security programme for Vesak Week to ensure the public can observe religious activities in a peaceful and secure environment, free from fear or inconvenience.

The Police Department said the measures have been introduced in view of heightened religious observances across the country during the Vesak season, with Buddhists worldwide preparing to mark Vesak Full Moon Poya Day on 30 May 2026.

Authorities said large crowds are expected at major Buddhist sites, including ancient places of worship, while Vesak lantern displays, pandals and Bhakthi Gee programmes will be held across the island.

Under the special security plan, the Inspector General of Police has directed all police stations to take steps to minimise traffic congestion and ensure public convenience in areas with high footfall.

The Police Department said enhanced day and night mobile patrols will be deployed across all divisions, alongside special security operations aimed at safeguarding public safety and protecting property during the festive period.

Authorities also warned that strict legal action will be taken against individuals or groups whose behaviour is deemed to undermine the dignity and sanctity of Vesak or cause inconvenience to devotees.

In a set of public guidelines issued for the season, the Police Department urged organisers of Dansal programmes to comply with health and safety standards and implement proper crowd management measures to prevent congestion.

The public has also been advised to refrain from behaviour deemed inappropriate for the religious season, avoid excessive noise, and ensure responsible use of loudspeakers with prior approval.

Devotees have been requested to abstain from alcohol and narcotic substances during Vesak activities, while being urged to remain vigilant against theft in crowded areas and ensure the safety of children and elderly persons.

The Police Department further encouraged the public to report emergencies via hotlines 118 and 119, and to submit relevant video footage of traffic violations or environmental offences through designated WhatsApp channels for legal action.

Authorities said the measures are aimed at ensuring that Vesak is observed in a spirit of peace, devotion and public harmony across the country.

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India, Lanka boost air power ties as IAF Chief visits Colombo

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(ANI) May 22:Marking a critical milestone in regional security cooperation, India’s Chief of the Air Staff, Air Chief Marshal AP Singh, addressed the National Defence College (NDC) in Sri Lanka during his three-day visit to the island nation.

Speaking on the strategic imperative of “Air Power in the 21st Century,” the Air Chief Marshal highlighted the evolving dynamics of modern warfare and the growing necessity of robust bilateral military partnerships in the Indian Ocean Region.

The high-level interaction served as a central fixture of his three-day official visit to the island nation, aimed at anchoring the defence ties between the two neighbours.

Sharing the details in a post on X, the Indian High Commission in Sri Lanka said that the Air Chief also interacted with the Commandant and the National Defence College course participants.

The Chief of the Air Staff Air Chief Marshal A P Singh visited the National Defence College, Sri Lanka on 20 May 26. He spoke on the topic ‘Air power in the 21st century’ and interacted with the Commandant and NDC course participants

Earlier on Wednesday, the High Commission shared that the Air Chief was received with a Guard of Honour at SLAF headquarters prior to formal meetings on Tuesday, prior to his call on with the Commander of SLAF.

“He also called on the Deputy Minister of Defence Maj Gen Aruna Jayasekara (Retd), and the Secretary Defence, AVM Sampath Thuyacontha (Retd). ACM A P Singh paid his respects to the IPKF martyrs by laying a wreath at the monument in Bataramulla”, the post added.

Air Chief AP Singh had arrived in Sri Lanka on an official visit from 19-21 May 26.

India and Sri Lanka have a longstanding defence partnership.

Earlier in April, the two countries reaffirmed their growing maritime partnership through the fourth edition of the bilateral diving exercise, IN-SLN DIVEX 2026, conducted at Colombo from April 21-28.

The exercise witnessed participation of the Indian Navy’s Diving Support and Submarine Rescue Vessel, INS Nireekshak, alongside diving teams from both navies- underscoring enhanced operational coordination and professional synergy, the Indian Navy said in a statement.

As India continues to deepen its military engagements with friendly nations, the multilateral military Exercise PRAGATI 2026 commenced on Wednesday at Umroi Military Station, Meghalaya, with the participation of 12 friendly nations, namely Bhutan, Cambodia, Indonesia, Laos, Malaysia, Maldives, Myanmar, Nepal, Philippines, Seychelles, Sri Lanka and Vietnam.

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