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Fitch: Onus on debt negotiations after Sri Lanka’s IMF Staff Agreement

Published

4 years ago

2022/09/3

The IMF staff-level agreement with Sri Lanka on a USD2.9 billion programme, confirmed on 1 September, appears to signal a sharp change in policy settings in order to achieve macroeconomic stability, including through large fiscal adjustment, greater exchange-rate flexibility and more central bank autonomy, says Fitch Ratings. This should facilitate negotiations with official and private creditors, but the timing of any debt restructuring agreement remains uncertain.

The Extended Fund Facility will not be approved by the IMF’s Executive Board until the government has implemented a number of agreed prior actions (not publicly specified), financing assurances have been received from official creditors, and good faith efforts have been made to reach agreement with private creditors. The IMF has assessed Sri Lanka’s debt burden as unsustainable, so the outcome of negotiations with creditors should involve debt relief.

Tax reform will be an important element of the agreed programme. Personal income tax will be made more progressive and corporate income tax and VAT will be broadened, with a goal of achieving a primary fiscal surplus of 2.3% of GDP by 2025, compared with a deficit of 5.7% in 2021.

In line with this, the interim 2022 budget unveiled by the new government on 30 August laid out plans to raise the standard rate of VAT to 15% from 12% from 1 September, and proposed compulsory tax registration for all residents aged over 18 years. The budget sought to raise government revenue/GDP from 8.2% in 2021 to 15% by 2025, and to reduce public debt/GDP from around 110% at end-2021 to not more than 100% in the medium term. The revised budget deficit for 2022 is projected at 9.8% of GDP, up from 8.8% of GDP in the original 2022 budget.

We believe the government has some room to reduce capex, but its non-discretionary expenditure is large. Interest payments and wages were equivalent to 1.3x government revenue in 2021. We expect additional revenue raising to be the main driver of fiscal consolidation, but the budget signalled there will be reallocation of expenditure towards social spending to cushion the effects of the economic crisis.

Political instability will pose risks to the implementation of reforms and the distribution of IMF funding, even if a debt restructuring is agreed. Additional social spending may not be sufficient to prevent public opposition, particularly given that the government’s public support appears weak, in our assessment, and that the economic growth recovery in 2023-2024 will be constrained by the strong fiscal consolidation.

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Heat Index at Caution Level in the Northern, North-central, North-western, Western, Sabaragamuwa, Eastern and Southern provinces and in Monaragala district

Published

7 hours ago

2026/04/16

Priyan

Warm Weather Advisory
Issued by the Natural Hazards Early Warning Centre
Issued at 3.30 p.m. on 15 April 2026, valid for 16 April 2026.

The Heat index, the temperature felt on human body is likely to increase up to ‘Caution level’ at some places in the Northern, North-central, North-western, Western, Sabaragamuwa, Eastern
and Southern provinces and in Monaragala district.

The Heat Index Forecast is calculated by using relative humidity and maximum temperature and this is the condition that is felt on your body. This is not the forecast of maximum temperature. It is generated by the Department of Meteorology for the next day period and prepared by using global numerical weather prediction model data.

Effect of the heat index on human body is mentioned in the above table and it is prepared on the advice of the Ministry of Health and Indigenous Medical Services.

ACTION REQUIRED
Job sites: Stay hydrated and takes breaks in the shade as often as possible.
Indoors: Check up on the elderly and the sick.
Vehicles: Never leave children unattended.
Outdoors: Limit strenuous outdoor activities, find shade and stay hydrated.
Dress: Wear lightweight and white or light-colored clothing.

Note:
In addition, please refer to advisories issued by the Disaster Preparedness & Response Division, Ministry of Health in this regard as well. For further clarifications please contact 011-7446491

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Indonesian Navy Sailing Ship KRI BIMA SUCI – 945 makes port call in Colombo

Published

12 hours ago

2026/04/15

Priyan

The Indonesian Navy Sailing Ship KRI BIMA SUCI – 945 arrived at the Port of Colombo on a goodwill visit on 15 Apr 2026 and was welcomed by the Sri Lanka Navy (SLN) in compliance with time-honoured naval traditions.

The vessel’s arrival is a key highlight of the ASEAN Plus Cadet Sail (APCS) – 2026 programme , accompanying a diverse contingent of Navy cadets from 26 different nations alongside their Indonesian counterparts.

The ship is commanded by Commander SUGENG HARIYANTO. Meanwhile, Officer Under-trainees of the Sri Lanka Navy are expected to participate in various programmes aboard the
ship and naval personnel observe its operational functions during its stay in the island.

Furthermore, the ship’s crew is scheduled to take part in programmes organized by the Sri Lanka Navy to enhance camaraderie between the two navies, as well as visit several tourist attractions in the country.

News

PM initiates children into learning at the auspicious time while observing New Year traditional customs and rituals

Published

12 hours ago

2026/04/15

Priyan

The Sinhala and Tamil New Year cultural festival, organized by the Ministry of Buddha Sasana, Religious and Cultural Affairs, was held on Tuesday (14) in Gampaha under the patronage of Prime Minister Dr. Harini Amarasuriya, with the performance of traditional auspicious customs and rituals.

In accordance with tradition, during the Punya Kalaya (inauspicious time), the Prime Minister visited the Medagama Sri Sunandarama Viharaya in Gampaha and participated in religious observances and received blessings from Venerable Thunmodara Samitha Thero, a member of the Karaka Sangha Sabha of the Sri Lanka Ramanna Maha Nikaya and the Chief Incumbent of the Medagama Sri Sunandarama Dharmaduta Piriven Viharaya.

The traditional observances of the Sinhala and Tamil New Year cultural festival were held at the residence of Darshana Weerasinghe in Gampaha. Marking the auspicious time for commencing work, and upon the invitation of the host family, the Prime Minister planted a sapling within the premises. Concurrently, Minister of Buddha Sasana, Religious and Cultural Affairs, Dr. Hiniduma Sunil Senevi, and Minister of Foreign Affairs and Tourism, Vijitha Herath, joined the PM.

Subsequently, the Prime Minister joined children in engaging in traditional folk games.

At the auspicious time for engaging work and educational activities, the PM participated with children in reading and writing, guiding them and symbolically marking the commitment to advancing the educational development of the nation’s children.

Thereafter, the Prime Minister and other distinguished guests observed the traditional customs of exchanging greetings, transactions and gifts with the host family, and joined them to partake in the customary New Year meal.

Extending New Year greetings to all citizens, the Prime Minister expressed her gratitude to all Sri Lankans, both at home and abroad, for their contributions in overcoming and effectively managing the various challenges faced by the country.

Speaking at the occasion, Minister Dr. Hiniduma Sunil Senevi stated that the Sinhala and Tamil New Year festival symbolizes renewal and purity, and reflects the energy of the sun. He also conveyed his wishes for a peaceful and prosperous New Year for all.

The occasion was attended by the Deputy Minister of Finance and Planning and Minister of Labour, Dr. Anil Jayantha; Deputy Minister of Labour, Mahinda Jayasinghe; Member of Parliament for the Gampaha District, Ruwan Mapalagama; along with the Gampaha District Secretary, Mayor, Divisional Secretaries, and a large number of government officials.

(Prime Minister’s Media Division)