Business
IMF reaches staff-level agreement on Second Review of Sri Lanka’s EFF
After constructive discussions in Colombo, IMF Senior Mission Chief Peter Breuer and Deputy Mission Chief Ms. Katsiaryna Svirydzenka issued the following statement:
“The IMF team reached staff-level agreement with the Sri Lankan authorities on the second review under the economic reform program supported by a 4-year Extended Fund Facility (EFF) arrangement and concluded the 2024 Article IV Consultation discussions. The EFF 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 prior actions; (ii) the completion of financing assurances review, which will focus on confirming multilateral partners’ committed financing contributions and whether adequate progress has been made with the debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the program’s debt targets. “Upon completion of the Executive Board review, Sri Lanka would have access to SDR 254 million (about US$337 million), bringing the total IMF financial support disbursed under the arrangement to SDR 762 million (about US$1 billion).
“The authorities are making good progress in implementing an ambitious reform agenda under the EFF with commendable outcomes, including rapid disinflation, robust reserve accumulation, and initial signs of economic growth while preserving the stability of the financial system. Public finances have strengthened following substantial fiscal reforms. Program performance was strong, with all quantitative performance criteria and indicative targets for end-December 2023 met except for the indicative target on social spending. Most structural benchmarks due before end-February 2024 were either met or implemented with delay. Reforms in some areas are still ongoing.
“The economic situation is gradually improving. Growth turned positive after six consecutive quarters of contraction, registering 1.6 percent and 4.5 percent y-o-y growth in the third and fourth quarters of 2023 respectively. High-frequency economic indicators point to a continued pick-up in manufacturing, construction, and services. Inflation has come down from a peak of 70 percent in September 2022 to 5.9 percent in February 2024.
Gross official reserves increased to US$4.5 billion at end-February 2024 with sizeable foreign exchange purchases by the central bank. “Sustaining the reform momentum is critical to put the economy on a path towards lasting recovery and stable and inclusive economic growth. We welcome the authorities’ commitment to fiscal reforms. Continued progress towards the introduction of the property tax is critical, together with revenue measures to meet the revenue mobilization goals in 2025 and beyond. Revenue administration and anti-corruption efforts to boost tax collections are also key.
Maintaining cost recovery in fuel and electricity pricing will help minimize fiscal risks arising from state-owned enterprises. “While inflation has decelerated faster than expected, continued monitoring is warranted to help anchor inflationary pressures and support macroeconomic stability. Against ongoing external uncertainty, it remains important to continue to rebuild external buffers through strong reserves accumulation. “Sri Lanka’s Agreements in principle with the Official Creditor Committee and Export-Import Bank of China on debt treatments consistent with program parameters were important milestones putting Sri Lanka’s debt on the path towards sustainability.
The critical next steps are to finalize the agreements with the official creditors and reach Agreements in Principle with the main external private creditors in line with program parameters in a timely manner. This should help restore Sri Lanka’s debt sustainability over the medium term. “The authorities’ recently published Action Plan to implement the key recommendations of the Governance Diagnostic Report is a welcome step. Sustained efforts to implement these reforms will be essential for addressing corruption risks, rebuilding economic confidence, and making growth more robust and inclusive.
The IMF mission team met with tea plantation workers in Nuwara Eliya and learned first-hand about some of the challenges Sri Lanka’s most vulnerable face. Continued efforts to improve targeting, adequacy, and coverage of social safety nets, particularly Aswesuma, remain critical to protect the poor and the vulnerable.
“The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Minister of Power and Energy Mr. Kanchana Wijesekera, State Minister Mr. Shehan Semasinghe, Chief of Staff to the President Mr. Sagala Ratnayaka, Secretary to the Treasury Mr. K M Mahinda Siriwardana, and other senior government and CBSL officials. The 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
(CBSL)
Port City Colombo, Sri Lanka’s first multi-service Special Economic Zone, recently hosted Lord Swire, Deputy Chairman of the Commonwealth Enterprise and Investment Council (CWEIC) to an exclusive session on the project’s attractive investment opportunities and economic potential within the South Asian regional sphere. He was accompanied by CWEIC officials including Niro Cooke, Country Chair – Sri Lanka and Group Director, The Capital Maharaja Organisation, Pamela O’Leary, Board Member, and Deshan Gonawela, Country Director. The delegation was welcomed by Revan Wickramasuriya, Director General, the Colombo Port City Economic Commission, and Thulci Aluwihare, Deputy Managing Director, CHEC Port City Colombo (Pvt) Ltd.
A Port City Colombo press release said: ‘The visit encompassed a detailed presentation at the Port City Colombo Sales Gallery, where the delegation was briefed on the project progress and future projections as a competitive investment hotspot in the South Asia region. Port City Colombo’s key appeal to top investor markets including the Middle East and the Asia-Pacific, progressive regulatory environment that promotes the ease of doing business, and diverse options for investors, were the focal point of the presentation. The CWEIC delegation was also provided an experiential tour of the Mall at Port City Colombo, South Asia’s pioneering downtown duty-free retail offering, which is already contributing towards Colombo’s evolution as a hub for tourism and business.
‘Sri Lanka needs to show that it is open for Foreign Direct Investment,’ said Lord Swire, Deputy Chairman, CWEIC. ‘There are diverse opportunities, not just in the tea and tourism industry, but also within the scope of Port City Colombo’s Special Economic Zone, which is a truly exciting and ambitious initiative. The Commonwealth showcases some of the most diverse and fastest growing economies in the world, with prospective investors who will be interested in exploring the intriguing opportunities that Port City Colombo and Sri Lanka as a whole are bound to offer.’
‘Niro Cooke, Country Chair – Sri Lanka, CWEIC, and Group Director, The Capital Maharaja Organisation, further elaborated: ‘Sri Lanka has long been a sought-after tourism destination. However, we believe that Sri Lanka has the opportunity to evolve into a competitive diversified service-based economy, which could reinvent our nation into a truly formidable regional business hub. With FDI contributors such as Port City Colombo, a strengthened economic outlook, and strategic locality, Sri Lanka now has the right ingredients to become a progressive investment destination.’
‘As a CWEIC Strategic Partner, Port City Colombo has been actively involved in fostering investor relations across the Commonwealth. Port City Colombo recently participated in the Commonwealth Business Forum 2024 held in Apia, Samoa, where the project’s contribution towards sustainable economic growth and regional skilled mobility within South Asia was accentuated.
‘To learn more about the attractive investment opportunities at Port City Colombo, please visit www.portcitycolombo.lk. For information on Single Window Investment Facilitation and regulatory matters, please visit www.portcitycolombo.gov.lk.’
The public is hereby informed that, as per Section 10(2) of the Finance Business Act, No. 42 of 2011 (the Act), no person, other than a finance company and an institution specified in Section 10(6) of the Act, shall use the terms ‘finance’, ‘financing’, or ‘financial’ alone or in combination with another word or any of its derivatives or its transliterations or their equivalents in any language, as part of the name or the description or the business name of such person without prior written approval of the Central Bank of Sri Lanka.
In terms of Section 56(4) of the Act, any person who contravenes or fails to comply with the said provision is guilty of an offence under the Act.
The public is strongly advised to adhere to the aforesaid legal requirement.
For further inquiries:
Department of Supervision on Non-Bank Financial Institutions
Telephone number: 0112 477 504
Email address: snbfi_query@cbsl.lk
As the much-anticipated 2025 Classic Car Rally made its way through Sri Lanka’s scenic highlands, participants from across the globe found themselves in the heart of tea country at Heritance Tea Factory. A former 19th-century tea factory turned exclusive hotel, this iconic property served as a memorable stop for the rally’s distinguished guests, offering a perfect blend of history, elegance and immersive experiences.
The rally, featuring an impressive lineup of vintage automobiles, included rare and classic models from the 1930s to the 1960s, with iconic names such as Bentley, Jaguar, Mercedes, Porsche, MG, Austin Healey, Delahaye, BMW and Volvo gracing the winding roads of Sri Lanka. These meticulously preserved automobiles, shipped from across the world, added a touch of nostalgia to the misty hills of Kandapola, perfectly complementing the colonial charm and heritage of Heritance Tea Factory.
During their stay, the 24 vintage car owners and enthusiasts, representing countries such as Australia, the United States, Belgium, Switzerland, Italy, Brazil, Germany, and the United Kingdom, experienced the hotel’s colonial charm and the breathtaking views of rolling tea fields. Many took the opportunity to partake in the estate’s signature tea plucking experience, donning traditional attire to hand-pick fresh Ceylon tea leaves, a unique and fitting tribute to Sri Lanka’s rich tea heritage.
Dining at Heritance Tea Factory proved to be another highlight, with the rally participants indulging in delicious menus featuring the finest local and international cuisine, all in all an extraordinary gastronomic experience in the misty mountain ambiance.
Beyond the culinary experiences, the comfort of elegantly restored rooms overlooking the lush tea plantations allowed the travellers to unwind and rejuvenate after a long journey through Sri Lanka’s winding roads. The warmth of the hotel’s hospitality, combined with its eco-conscious approach made a lasting impression on all who stayed.
As the rally continued toward its next destination, Heritance Tea Factory left a special mark on the participants, celebrating a shared love for timeless elegance, heritage, and adventure.
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