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IMF notes ‘positive outcomes’ in Lanka reforms
An International Monetary Fund (IMF) mission on an eight-day visit to Sri Lanka ending on Friday to assess progress of economic and financial policies under Sri Lanka’s reform program supported by its Extended Fund Facility (EFF) noted the “positive outcomes” of the program, an end of mission statement said.
These included three consecutive quarters of GDP growth, accelerating to 5.3% year-on-year in Q1 2024, contained inflation below the Central Bank’s 5% target, reduced domestic borrowing rates, increased gross international reserves by $1.2 billion, and higher fiscal revenue collections, it said..
Full text of a statement issued by the IMF on Friday:
An International Monetary Fund (IMF) mission team led by Senior Mission Chief Peter Breuer visited Sri Lanka from July 25 to August 2, 2024, to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the authorities’ economic reform program supported by the IMF’s Extended Fund Facility (EFF) arrangement.
At the end of the mission, Breuer issued the following statement: “The economic reform program implemented by the Sri Lankan authorities is yielding commendable outcomes. The recovery continues with real GDP posting three consecutive quarters of expansion, and growth accelerating to 5.3 percent year-on-year in the first quarter of 2024.
Inflation remains contained below the Central Bank of Sri Lanka’s (CBSL) 5 percent target and domestic borrowing rates have declined. Gross international reserves increased by US$ 1.2 billion during the first half of 2024 and reached US$ 5.6 billion. Fiscal revenue collections increased during the same period. Going forward, these improvements need to translate into better living conditions for all of Sri Lanka’s people.
“With Sri Lanka’s knife-edged recovery at a critical juncture, sustaining the reform momentum and ensuring timely implementation of all program commitments are critical to cement the hard-won economic progress to date and put the economy on a firm footing. Maintaining macroeconomic stability and restoring debt sustainability require further efforts to raise fiscal revenues. The 2025 Budget needs to be underpinned by appropriate revenue measures and continued spending restraint so as to reach the medium-term primary balance objective of 2.3 percent of GDP—a key requirement for restoring Sri Lanka’s debt sustainability.
The planned relaxation of import restrictions on motor vehicles will support revenue mobilization in 2025. Tax administration reforms could further improve compliance, including by establishing a properly functioning VAT refund system for exporters by April 2025. Any proposed measure eroding the fiscal position needs to be offset by compensating measures of high quality. Avoiding new tax exemptions will not only reduce corruption risks and fiscal revenue leakages, but also ensure a more predictable and transparent tax system. Continuing to maintain energy prices at cost-recovery levels is critical to avoid potential fiscal costs. Protecting the poor and the vulnerable through improved targeting and better coverage of cash transfers remains critical. Policy slippages could jeopardize the recovery.
“The recent parliamentary approval of two key pieces of legislation—the Public Financial Management Act and the Public Debt Management Act—is a milestone that will improve fiscal discipline and prudent debt management, bolstering transparency and accountability. Developing a holistic debt management strategy and establishing a well-structured and integrated Public Debt Management Office will help lower the government’s financing risks.
“Inflation has been well-contained. Monetary policy should remain prudent and prioritize the anchoring of inflation expectations. Maintaining price stability also hinges on safeguarding CBSL’s independence. Continued reserve accumulation and exchange rate flexibility remain key priorities.
“The recent amendments to the Banking Act and the related implementing regulations will help safeguard financial stability. To allow the financial sector to contribute to economic growth, the authorities need to ensure the banking sector is adequately capitalized.
“The recently formulated National Anti-corruption Agenda, building on the authorities’ earlier governance action plan, is a welcome step. A steadfast implementation of governance reforms outlined in the Governance Diagnostic Report, prioritizing near-term commitments under the EFF program, is critical to addressing corruption risks and promoting a break from past policy missteps.
Ensuring an enabling environment for governance reforms is key to bolstering public confidence and facilitating implementation of these important efforts.
“The authorities have made commendable progress with putting debt on a path towards sustainability. The execution of the domestic debt restructuring and finalizing the agreements with the Official Creditor Committee and China EXIM Bank are major milestones. IMF staff assessed the “Joint Working Framework” announced at the conclusion of the second round of restricted discussions with the bondholder committee and have provided this assessment to the authorities and, on their request, the financial advisors of the bondholders. We encourage a swift resolution of the remaining steps to achieve debt sustainability and regain investor confidence. We will continue to support Sri Lanka’s ongoing debt restructuring efforts. “Progress in meeting key commitments under the IMF-supported program will be formally assessed in the context of the third review of the EFF. The timing of the third review will be discussed with the government after the recently announced presidential elections.
“The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, 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. The IMF team also met with Parliamentarians, representatives from the private sector, civil society organizations, and development partners.
“We would like to thank the authorities for the excellent collaboration during the mission and reaffirm our commitment to support Sri Lanka for a full and inclusive economic recovery.”
News
Diesel replacement costs up to Rs. 4.5 bn in April
Coal power generation falls by 27 GWh
A sharp decline in coal-fired electricity generation in April 2026, compared to the corresponding month last year, may have cost Sri Lanka more than Rs. 4.5 billion, as the country was compelled to rely on significantly more expensive diesel-powered generation to make up the shortfall, according to power sector data.
The coal-based electricity generation, in April 2026, was 27 GWh lower than in April 2025, a development that has sparked concern among energy experts and economists over the mounting financial burden on the country’s already strained power sector.
Industry calculations reveal that generating the lost 27 GWh through diesel-fired power plants would require approximately 8.1 million litres of fuel, based on a standard consumption rate of 0.3 litres per kilowatt-hour.
With fuel costs estimated at around USD 286 per barrel, or roughly USD 1.80 per litre, the replacement power would have cost approximately USD 14.57 million. At the prevailing exchange rate of about Rs. 315 to the US dollar, the bill exceeds Rs. 4.5 billion for April alone.
Energy sector analysts say the figure highlights the enormous economic value of maintaining high availability at coal-fired power plants, particularly at a time when Sri Lanka is seeking to reduce electricity costs and strengthen energy security.
“The financial impact of losing low-cost coal generation is substantial. Every unit not generated by coal has to be replaced by a much more expensive source, usually diesel or fuel oil, which ultimately affects the finances of the power sector and the wider economy,” a senior energy analyst said.
Even under a more conservative calculation, based on the average electricity generation cost of around Rs. 72 per unit recorded in 2025, the loss remains significant. The 27 million units not generated from coal would translate into an additional cost burden of nearly Rs. 2 billion.
The decline in coal generation comes at a critical juncture for Sri Lanka’s energy sector.
The government has repeatedly emphasised the need to maintain affordable electricity tariffs, while reducing dependence on imported fossil fuels and expanding renewable energy capacity.
Experts warn that any sustained reduction in low-cost baseload generation could undermine these objectives, increasing the need for costly thermal power and placing additional pressure on foreign exchange reserves.
The latest figures are expected to intensify scrutiny of generation planning, fuel procurement strategies and the operational performance of major power plants. They also underscore the importance of ensuring uninterrupted operation of coal-fired facilities until sufficient renewable and storage capacity is available to replace them reliably.
With the country striving to maintain economic stability and energy affordability, analysts argue that avoiding such generation shortfalls must remain a top priority for policymakers and power sector planners.
By Ifham Nizam
News
Sallay on hunger strike: Counsel warns CID
Asith Siriwardena Counsel for former Director of State Intelligence Service, Major General (Retd.) Suresh Sallay, detained under the Prevention of Terrorism Act (PTA) over the 2019 Easter Sunday attacks, has called upion the Director of the CID, SSP G. S. Abeysekara, to transfer his client either to a private or government hospital to receive urgently needed teatment.
Sallay was on a hunger strike, claiming mistreatment by the CID, his wife said, after visting him, yesterday.
Siriwardena wrote to the CID Director yesterday (07) after Sallay was visited by his wife, son and brother.
The text of the letter: “The family observed that Mr. Sallay’s physical condition has deteriorated to an alarming and critical level.
“He is reportedly unable to attend the visitation without the physical assistance of two officers. During the visit, he informed his family that he had refused medication, saline, food, and water. He further expressed a belief that his death is imminent and requested that arrangements be made for the donation of his eyes. He also requested an immediate visit from his Attorney for the purpose of executing his last will and other related legal documentation.
“These statements, and circumstances, demonstrate a grave deterioration in his physical and psychological condition. It is apparent that he is no longer capable of making rational decisions concerning his own welfare, health, and survival.
The prolonged conditions, under which he is presently being held have, at the very least, created a serious and immediate risk to his life.
“The State assumes a non-delegable duty of care toward every person held in its custody. Once an individual is deprived of liberty, the responsibility for safeguarding that person’s life, health, and wellbeing rests squarely upon the authorities exercising control over that individual. Any failure to discharge that duty in the face of a known and imminent medical emergency is a matter of the utmost legal seriousness.
“You are hereby formally notified that Mr. Sallay requires immediate medical intervention by qualified independent medical professionals and urgent transfer to an appropriate hospital facility capable of providing comprehensive assessment and treatment. Any delay, refusal, or failure to act despite clear knowledge of his precarious condition may give rise to personal and institutional liability under the criminal and civil law of Sri Lanka
“Should General Sallay suffer irreversible injury or death while remaining in the present conditions despite this explicit warning, it will be open to the relevant authorities, courts, and investigative bodies to examine whether such conduct amounts to a deliberate disregard of a known and foreseeable risk to life. Those responsible for decisions concerning his continued detention and medical care may be required to account personally for their actions and omissions.
“Accordingly, I demand that:
1. Mr. Sallay be transferred forthwith to a government or private hospital equipped to provide urgent medical treatment;
2. He be examined immediately by independent medical specialists, including psychiatric professionals if necessary; His legal representatives and family be granted reasonable access to him;
3. A written update on his medical status and the measures taken for his protection be provided without delay. This letter constitutes formal notice. Any further failure to act despite knowledge of the circumstances set out herein will be relied upon in any future judicial, criminal, constitutional, or international proceedings arising from harm suffered by my client.”
News
Opp. questions why Rs 10 bn meant for Ditwah victims held in Treasury account
The Opposition says the NPP government should explain why the funds received by Rebuilding Sri Lanka haven’t been utilised to provide relief to those affected by Ditwah cyclone in late November last year.
The failure on the part of the government to utilise as much as Rs 10 bn, received from local and foreign donors, came to light when the National Audit Office (NAO) appeared before the Public Finance Commission recently.
The NAO told the House Committee that no statutory fund currently existed under the name “Rebuilding Sri Lanka” and the programme operated through an account maintained under the Deputy Secretary to the Treasury.
The NAO declared that no payments had been made through this account to date.
Former SLPP MP Sanjeewa Edirimanne said that until the disclosure made by the NAO the country had been led to believe the Rebuilding Sri Lanka fund provided post-Ditwah relief. Pointing out that JVP General Secretary Tilvin Silva’s declaration in Jaffna that funds allocated to hold Provincial Council polls
had been utilised to assist Ditwah victims, Edirimanne said such blatant lies were propagated while the government held on to Rs 10 bn meant for the disaster victims.SJB MP Mujibur Rahman questioned the rationale behind keeping funds received specifically for Ditwah victims still living under extremely difficult conditions. (SF)
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