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IMF reaches staff-level agreement on first review of Sri Lanka’s Extended Fund Facility arrangement
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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A Policy is being formulated to ensure Child Protection in the use of Technology — Prime Minister
Prime Minister Dr. Harini Amarasuriya stated that a policy is currently being formulated to ensure child protection in the use of technology.
The Prime Minister made this statement on Thursday (08) in Kandy while briefing the Most Venerable Mahanayake Theros of the Asgiriya and Malwathu Chapters on the issue that has arisen regarding the Grade 6 English module. Thereafter, printed copies of all modules were presented to the Mahanayake Theros.
Earlier on Thursday (08), the Prime Minister visited the Malwathu Viharaya in Kandy and met the Most Venerable Thibbatuwawe Sri Siddhartha Sumangala Nayaka Thero, the Mahanayake of the Malwathu Chapter, where she explained the error that had occurred in the first print run of the English module for Grade 6 .
The Mahanayake Theros emphasized that education is a sensitive subject and that such matters should be handled with greater sensitivity and proper oversight. They further advised that a formal investigation should be conducted and that education reforms should be carried forward in a systematic manner.
Subsequently, the Prime Minister visited the Asgiriya Maha Viharaya and met the Most Venerable Warakagoda Sri Gnanarathana Mahanayaka Thero of the Asgiriya Chapter, where she clarified the error related to the English module.
The Mahanayake Thero noted that education reforms are a timely necessity and should be implemented with due oversight and careful review and also pointed out that there are broader issues in Sri Lanka regarding the use of technology, which are evident in the manner in which modern tools such as AI technologies are being used on social media.
Clarifying the issue Prime Minister Dr. Harini Amarasuriya further stated,
“We have appointed a committee to look into this issue, and based on the recommendations of the National Institute of Education (NIE), steps were taken to remove the relevant lesson. In addition, all printed copies of the relevant module have been stamped, and no module has been distributed to schoolchildren. A formal investigation into this matter has been initiated by the Ministry, and a complaint has also been lodged with the Criminal Investigation Department.
At the same time, we are in the process of formulating a policy on child protection in the use of technology”.
Thereafter, addressing the media and responding to the’ questions raised by journalists, the Prime Minister stated:
“The Opposition is attempting to use this national task for their own political advantage. However, many in society have expressed their views on the issues that have arisen in a positive manner, with the objective of identifying and correcting mistakes. The government has decided to move forward with education reforms by recognizing the error that have occurred and rectifying them. We will take the no-confidence motion brought by the Opposition as an opportunity to further advance dialogue on education reforms”
The occasion was graced by the Most Venerable Anunayaka Thero of the Asgiriya Chapter, Venerable Narampanawe Ananda Nayaka Thero; Deputy Registrar of the Asgiriya Chapter, Venerable Muruddeniye Dhammarakkhita Thero; Deputy Registrar of the Malwathu Chapter, Venerable Mahawela Rathanapala Thero; Members of Parliament Thushari Jayasinghe and Thanura Dissanayake; Mayor of Kandy Chandrasiri Wijenayake; Secretary to the Ministry of Education Nalaka Kaluwewa; and Secretary to the Ceylon Teachers’ Union in Central Province D. D. Wimalaweera.

[Prime Minister’s Media Division]
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The deep depression to the South-east of Sri Lanka is likely to intensify in to a cyclonic storm during the next 24 hours
A RED warning for a deep depression to the South-east of Sri Lanka has been issued at 01.00 a.m. on 09 January 2026 for the period until 01.00 a.m. 10 January 2026 by the Natural Hazards Early Warning Centre, of the Department of Meteorology.
The deep depression in the Bay of Bengal to the southeast of Sri Lanka (At 01:00 a.m. on Jan 9th, 2026 located about 200 km East of Pottuvil) is very likely to intensify further and move west-northwestwards towards the coast of Sri Lanka between Pottuvil and Trincomalee in the evening today (9th January 2026.) The system is likely to intensify in to a cyclonic storm
during the next 24 hours.
Hence, showery, and windy condition over the island, particularly in the Northern, North-Central, Eastern, Uva and Central provinces is expected to enhance.
News
Easter Sunday carnage: SJB asks Church to seek arrest warrant for suicide bomber’s wife, Sara
… asks who called for third DNA test
Top SJB spokesman Mujibur Rahuman, MP, wants the Catholic Church to exert pressure on the NPP government to have an arrest warrant issued for Pulasthini Mahendran aka Sara Jasmine, wife of Katuwapitiya suicide bomber Atchchi Muhammadu Hastun.
Colombo District lawmaker yesterday (8) told The Island that the Catholic Church should throw its weight behind the SJB’s call for an open warrant and pressure the government to ask for Interpol assistance to track down the fugitive.
She would be able to throw light on the 2019 Easter Sunday carnage, the former UNPer said, urging the Catholic Church to make its position known without delay.
Alleging that Public Security and Parliamentary Affairs Minister Ananda Wijepala had been evasive in his response to a query posed to him in parliament on Wednesday regarding Easter Sunday attacks, lawmaker Rahuman asked whether the NPP was trying to cover up something.
Against the backdrop of the NPP’s declaration that Sara Jasmine is alive, the government should inquire into the circumstances the Government Analyst Department in late Sept 2023 announced that she was among those who perished in multiple blasts at Sainthamaruthu on April 26, 2019.
The Police Headquarters made the announcement on behalf of the Government Analyst’s Department that reached the conclusion after carrying out DNA tests for the third time on the tissue samples that had been obtained for the investigations by Judicial Medical Officers, Detectives from the Criminal Investigations Department, and the Government Analyst’s Department.
After the change of government following the last presidential election the NPP initiated an inquiry to verify the third DNA test. MP Rahuman pointed out that the third DNA test had been quite controversial as the two previous proved that she was not among the dead at Sainthamaruthu, where the group including some family members gathered.
The CID inquiring into the third DNA test last month recorded statements from C.D. Wickremeratne who had been the IGP at that time as well as DIG CID, Prasad Ranasinghe regarding the issues at hand. Wickremaratne has said that the third test was ordered in the wake of the concerns expressed at the National Security Council (NSC) regarding Sara Jasmine’s status.
MP Rahuman stressed that right along he believed Sara Jasmine was alive and had taken refuge in India.
MP Rahuman quoted terror mastermind Zahran Hashim’s wife, Abdul Cader Fatima Hadiya, as having told the Presidential Commission of Inquiry (P CoI) into the Easter Sunday blasts, that she heard Jasmine’s voice, after the blasts. Those killed at Sainthamaruthu, a week later, included Zahran Hashim’s father Mohamed Hashim and his brothers Zainee and Rilwan. Rilwan is believed to have been one of those who detonated bombs. Fatima and her child survived the Sainthamaruthu blasts and remain in government custody.
Lawmaker Rahuman said that the Catholic Church’s intervention is essential to compel President Anura Kumara Dissanayake to go the whole hog. “We cannot forget that the father of two of the suicide bombers was on the JVP National List at the 2015 parliamentary election and that wife of one of the bombers blasted herself at their Dematagoda home.”
By Shamindra Ferdinando ✍️
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