Business

SL clinches deal with IMF for 4-year EFF of $ 2.9 billion subject to debt restructuring and prior actions

Published

3 years ago

2022/09/2

By Hiran H.Senewiratne

The International Monetary Fund said it had reached a deal with Sri Lanka for a 4-year 2.9 billion US dollar extended fund facility subject to debt restructuring and prior actions.Under the program the Sri Lankan budget will have to generate a primary surplus (debt before interest) of 2.3 per cent by 2024. The 2022 expected primary deficit is 4 per cent of GDP, the IMF senior mission led by Peter Breuer said.

“These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024, Breuer said at a media conference at the Central Bank head office in Colombo yesterday. Breuer together with Masahiro Nozaki and other members of the IMF delegation visited Sri Lanka from August 24 to September 1 to continue discussions on IMF support for Sri Lanka and the local authorities’ comprehensive economic reform program.

Breuer added: ‘The 2022 primary deficit was projected by the government at -4.0 per cent of GDP. Sri Lanka will also have to negotiate with creditors to restructure debt.

“The agreement is subject to the approval by the IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors.

“Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and to close financing gaps.

“The Central Bank will also have to stop printing money (monetary financing) and bring down inflation.’’

The full IMF statement is reproduced below:

“The Sri Lankan authorities and the IMF team have reached staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion).

“The new EFF arrangement will support Sri Lanka’s program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka’s growth potential.

“The agreement is subject to the approval by IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors. Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.

“Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic. The April debt moratorium led to Sri Lanka defaulting on its external obligations, and a critically low level of foreign reserves has hampered the import of essential goods, including fuel, further impeding economic activity. The economy is expected to contract by 8.7 per cent in 2022 and inflation recently exceeded 60 per cent. The impact has been disproportionately borne by the poor and vulnerable.

“Against this backdrop, the authorities’ program, supported by the Fund, would aim to stabilize the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promoting sustainable and inclusive growth.

Key elements of the program are:

Raising fiscal revenue to support fiscal consolidation. Starting from one of the lowest revenue levels in the world, the program will implement major tax reforms. These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024.

Introducing cost-recovery based pricing for fuel and electricity to minimize fiscal risks arising from state-owned enterprises. The team welcomed the authorities’ already announced substantial revenue measures and energy pricing reforms;

Mitigating the impact of the current crisis on the poor and vulnerable by raising social spending, and improving the coverage and targeting of social safety net programs;

Restoring price stability through data-driven monetary policy action, fiscal consolidation, phasing out monetary financing, and stronger Central Bank autonomy that allow pursuing a flexible inflation targeting regime. A new Central Bank Act is a cornerstone of this strategy;

Rebuilding foreign reserves through restoring a market-determined and flexible exchange rate, supported by the comprehensive policy package under the program;

Safeguarding financial stability by ensuring a healthy and adequately capitalized banking system, and by upgrading financial sector safety nets and regulatory standards with a revised Banking Act; and Reducing corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, and conducting an in-depth governance diagnostic, supported by IMF technical assistance.

The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury K M Mahinda Siriwardana, and other senior government and CBSL officials. It also met with parliamentarians, representatives from the private sector, civil society organizations and development partners.

All News Advertisement

Business

David Pieris Group expands global footprint with investment in Dubai-based Navire Logistics

Published

36 mins ago

2025/12/20

Thilina Walpola

The David Pieris Group continues to strengthen its international presence with the acquisition of 50% ownership in Navire Logistics Services L.L.C, (www.navirelogistics.com) a reputed logistics company based in Dubai and Oman. This strategic move marks a significant milestone in the Group’s journey towards expanding its operations beyond Sri Lanka and positioning itself in the international markets.

In Sri Lanka, the Group’s logistics arm, D P Logistics (Private) Limited (DPL), has already established itself as a comprehensive logistics solutions provider — covering warehousing, transportation, freight forwarding, project logistics, inland distribution and custom house brokering.

DPL currently ranks among the top ten players in warehousing and 3PL operations and holds one of the largest container fleets amongst the logistics companies in the country. Despite operating in a highly fragmented freight forwarding market, DPL continues to capture a growing share, reinforcing its reputation as one of the very few local companies with expertise across all logistics disciplines.

David Pieris Group also acquired in 2022, Pulsar Shipping Agencies (Pvt.) Limited, the shipping arm of Expolanka Holdings PLC to expand its Logistics & Shipping Cluster into ship agency, husbandry services and marine logistics.

Leveraging this strong domestic foundation, DPL has now extended its capabilities to the international stage through its partnership with Navire Logistics Services L.L.C. The company’s expertise in custom house brokering, freight forwarding, cargo consolidation, warehousing, and transport solutions will be integrated into Navire Logistics’ operations, enhancing service quality and efficiency across the Middle East and South Asia.

The investment also extends to operations in Oman through a fully owned subsidiary, with further expansion plans already underway to establish operations in Saudi Arabia, Thailand, and India — strengthening the Group’s regional logistics network.

Business

HNB strengthens national response to Cyclone Ditwah

Published

41 mins ago

2025/12/20

Thilina Walpola

HNB Managing Director / CEO, Damith Pallewatte, hands over the donation to Secretary to the President Dr Nandika Sanath Kumanayake , HNB Chief Operating Officer Sanjay Wijemanne is also in the picture

HNB PLC has contributed of Rs. 100 million towards the Rebuild Sri Lanka Fund, reinforcing its commitment to national recovery efforts following the devastation caused by Cyclone Ditwah.

“On behalf of HNB, I wish to convey our solidarity with all our fellow Sri Lankans, especially those severely affected by Cyclone Ditwah. As a home-grown institution, our connection to the communities we serve runs deep. Many of our customers and colleagues have been directly or indirectly affected, and we are committed to standing with them during this difficult time and supporting them as they rebuild.”

“HNB’s contribution to the Rebuild Sri Lanka Fund is a sign of our commitment to this collective mission. We recognize that this is going to be a long and challenging process, but we stand ready and committed to support both the immediate and long-term recovery effort,” HNB Managing Director/ CEO, Damith Pallewatte stated.

Complementing its direct financial support to the Fund, HNB has also launched a nationwide disaster relief initiative as the first phase of a broader, coordinated response from the bank.

As part of the program, the Bank donated over 2,500 essential relief and nutrition packages to support displaced families, with the consignments formally handed over to the Sri Lanka Army to ensure structured, transparent, and equitable distribution across the impacted areas of Kandy, Gampaha, Kaduwela, and Hanwella, while separate packages were provided to affected employees to strengthen their personal recovery.

Business

ComBank ranked No 1 in Business Today’s Top 40 for 2024–25

Published

41 mins ago

2025/12/20

Thilina Walpola

Sharhan Muhseen, Chairman, and Sanath Manatunge, Managing Director/CEO of Commercial Bank

The Commercial Bank of Ceylon has been ranked No 1 in the Business Today Top 40 for 2024–25, reaffirming its position as Sri Lanka’s best-performing bank and one of the country’s top five strongest corporate entities for the 17th consecutive year.

Business Today assigned the Bank an aggregate score of 37.65, placing it at the top of its latest ranking of leading Sri Lankan enterprises.

In its presentation of the rankings, Business Today described Commercial Bank as “a beacon of resilience and renewal after a defining year,” noting that 2024 was shaped by strategic transformation, disciplined execution, and unwavering commitment to long-term sustainable growth. The publication recognised the Bank’s strength across key business lines, its deepened customer focus, and a performance trajectory that reinforced its reputation as Sri Lanka’s most resilient and customer-centric financial institution.

Reflecting on the ranking, Mr Sanath Manatunge, Managing Director/CEO of Commercial Bank said: “Being ranked No 1 in the Business Today Top 40 is a powerful endorsement of the discipline, resilience and purpose with which we steered the Bank through a year of tough conditions and decisive transformation. Our performance in 2024 was defined by navigating turbulence without losing sight of our priorities: strengthening fundamentals, supporting customers, and preparing the institution for long-term growth. This ranking is not merely an award; it is confirmation that our strategy is delivering results and that the Bank is firmly positioned to contribute to national progress with renewed confidence.”

Business Today also highlighted the Bank’s record-breaking financial performance during the year. The magazine quoted Mr Sharhan Muhseen, Chairman of Commercial Bank as saying that the Bank had delivered the highest profits in its history, and attributing this outcome to a disciplined focus on efficiency, digital innovation, and customer-centred transformation. These qualities, the publication stated, enabled the Bank to strengthen its market position and make meaningful contributions to economic recovery.

Among the milestones recognised were an equity capital infusion of Rs. 22.54 billion through a rights issue and the raising of Rs. 20 billion in Tier II capital via a debenture issue.