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IMF Staff Level Agreements are not a matter any administration can afford to take lightly

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Professor Priyanga Dunusinghe

What can Sri Lanka do if IMF leaves the negotiating table?

Professor Priyanga Dunusinghe at University of Colombo queries

By Sanath Nanayakkare

We cannot expect that IMF will always be there to support Sri Lanka if the country begins tinkering with the set of economic policies and reforms it needs to implement in exchange for financial assistance from the IMF, Priyanga Dunusinghe, a Professor in Economics in the Department of Economics at the University of Colombo said on 24th August 2024.

He said so in response to a question posed at him during ‘Paththaren Eha’ discussion televised live on Independent Television Network (ITN).

“The Extended Fund Facility (EFF) programme depends on Sri Lanka’s economic situation and policy priorities, as well as the IMF’s technical assessment of the country’s financial and economic outlook. IMF Staff Level Agreements are very technical, so Sri Lankan authorities should not attempt to deviate from them for political reasons. What can Sri Lanka do if the IMF leaves the negotiating table”, he queried.

Further speaking he said:

“The IMF has made a careful analysis of Sri Lanka’s debt stock and has shown the country the way to manage its debt repayment under a ‘debt sustainability programme’. The macroeconomic targets were given to Sri Lanka by the IMF mainly based on this programme. You would have heard from time to time that IMF and Sri Lankan authorities came to Staff Level Agreements. Such an agreement is arrived at after lengthy debates and discussions between the two sides on technical points, fiscal situation and hard data. You asked me whether this agreement can be amended.

Yes, a new government coming to power can consider amendments to the agreement. But there arises the issue whether such amendments can be made without affecting the fiscal targets in the existing framework. For example, if tax revenue as a percentage of GDP is to be increased to 15.3% by 2027, it has got to be achieved, otherwise we won’t be able to continue working with the IMF programme. Alternate ways can be discussed as to how this tax share can be mobilized. But if someone suggests we abolish VAT and we collect taxes from tax evaders instead, the IMF knows that it can’t be done within the stipulated time frame. The IMF programme is crafted by experts based on data and analyses and timelines. If someone goes to the IMF and says the agreement needs to be amended, then the data which has already been used in the current programme would have to be proven erroneous.

Furthermore, the fact that we are entering into re-negotiations will mean that our credibility will be at stake. If that happens not only the IMF, the World Bank, the ADB, the bilateral and multilateral creditors also will begin to lose faith in us. Secondly, are there any countries in the world that amended IMF agreements and came out of their economic troubles? Greece attempted to do this, but it didn’t work. It is now said Greece will not be able to restore its pre-crisis level which prevailed in 2008, until 2031. This is the outcome of tinkering with the IMF programme. This is true for Argentina, Ecuador and other similar countries. So, attention must be paid to these international experiences when trying to make amendments to the IMF programme”

“Dr. Montek Singh Ahluwalia, a key player for over three decades in Indian economic reforms visited Sri Lanka some time back. When asked about amending the IMF agreement he said,” Trying to amend the agreement is imprudent. What you need to do is; show the IMF that you are acting upon achieving the given targets as quickly as possible because going into re-negotiations will reflect badly on staff level agreements and would have adverse consequences on Sri Lanka. Dr. Ahluwalia even said that such a move could draw flak from IMF officials.”

Professor Dunsinghe said that the IMF reform programme has been painful to the people, but it is now starting to bear fruit and urged Sri Lankans to move ahead on the difficult path to benefit from it.

“Within 2 years, Sri Lanka was able to come out of the crisis. Locally, this feat is not acknowledged due to political differences. But internationally, it is recognized as an unprecedented achievement. Sri Lankan people will have to wait until the plant becomes a tree and the tree gives its yield. We are an impatient nation that always rushed to eating the leaves before the fruits were borne. So, it will be useful to keep in mind that if we rush to eat the leaves again, we will miss the fruits.”



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U.S.-Russia diplomatic thaw ignites Sri Lanka’s hopes for trade windfall

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Thilaka Jayasundara

Sri Lanka’s Ministry of Industries and Entrepreneurship Development Secretary Thilaka Jayasundara voiced confidence yesterday that warming U.S.-Russia relations could catalyse economic opportunities for Sri Lanka, during a forum hosted by the National Chamber of Commerce.

Speaking at the ‘Russia-Sri Lanka Development of Trade, Economic, and Banking Cooperation’ event, Jayasundara, a seasoned official with experience across multiple political administrations highlighted that eased secondary sanctions resulting from improved Moscow-Washington dialogue could unlock favorable trade conditions for Sri Lanka. Her remarks drew visible approval from Russian Ambassador Levan Dzhagryan, seated nearby.

“Sri Lanka’s balanced, neutral foreign policy positions us to benefit from any collaborative outcomes of U.S.-Russia talks,” she asserted, underscoring the nation’s potential to leverage evolving geopolitics for trade and investment gains.

Jayasundara didn’t miss the opportunity to urge Sri Lankan trade chambers to collaborate with the Export Development Board (EDB) to diversify exports and maximise foreign exchange earnings.

“Businesses and banks present here should explore to forge stronger B2B linkages for mutual benefit at the breakout sessions,” she added, referencing discussions at the forum that connected SMEs and large firms in agriculture, fintech, pharmaceuticals, industrial manufacturing among other sectors.

The secretary’s optimism aligns with Sri Lanka’s broader strategy to navigate global economic headwinds by capitalising on diplomatic shifts and expanding its export portfolio.

According to the EDB, the total export value from Sri Lanka to Russia was USD 144.25 Mn in 2023 and total imports from Russia to Sri Lanka for the same period were USD 393.55 Mn. Official data for 2024 remains pending.

The Russian delegation that took part in the B2B meetings was headed by Dr. Alexander Rybas, Trade Commissioner of the Russian Federation.

By Sanath Nanayakkare

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Hemas Hospitals named Official Healthcare Partner for JOE-PETE Big Match 2025

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Hemas Hospitals has proudly partnered with the JOE-PETE Big Match 2025 as the official healthcare provider, continuing its strong tradition of supporting community events and ensuring the safety and well-being of all participants and spectators.

As one of Sri Lanka’s most anticipated annual school cricket encounters, the JOE-PETE Big Match brings together passionate fans, students, and alumni from St. Joseph’s College and St. Peter’s College. With thousands expected to attend, Hemas Hospitals steps in once again, marking its fifth consecutive year of involvement, to provide expert medical support on-site.

“As a leading private hospital network, we’re proud to be a part of this iconic event. Our partnership reflects our commitment to community health and to being there where it matters most,” said Dr. Pradeep Edward, Director General Manager, Hemas Hospital Thalawathugoda. “We want all attendees to enjoy the event with peace of mind, knowing that their health and safety are in good hands.”

During the match days, Hemas Hospitals will deploy on-site medical teams, ambulances, and a qualified sports medicine medical officer to respond to any health emergencies or injuries. From first aid to injury management, the team is equipped to handle a wide range of situations with the efficiency and professionalism that Hemas is known for.

“Our practice of having highly trained medical staff and emergency support continues,” said Anjana Cramer, Business Development Manager. “Our aim is to be proactive, responsive, and accessible throughout the event.”

In addition to healthcare support, Hemas Hospitals will have a strong brand presence at the event, with Hemas flags, A-boards, a branded ambulance, and the medical team visibly positioned throughout the grounds.

“We want this partnership to not only represent medical readiness but also our larger message of promoting health and unity through sport,” said Duwayne Rozario, Executive – Business Development. “It’s about more than just treatment, it’s about being an active part of the community.”

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Sunsiyam Pasicuda; unique cluster of luxury chalets looking out to Eastern sea

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Sunsiyam Pasicuda; irresistible appeal

Weddings on the beach, an aqua platform to be served dinner in the sea; four ocean pavilions, informal camaraderie, more so, come as you are atmosphere for informality and bonhomie unmatched in any resort.

What are we talking about? Just a cautious; yet unavoidable blend for a holiday; and an atmosphere of ‘let your self go’, experience unmatched in a resort hotel.

Where are these ‘happenings’? At the Sunsiyam Pasicuda.

Just so, assuming you’ve been to the Maldives, and factually, it’s a demand driven destination, to the US, so too, we assume, Sunsiyam Pasicuda, is a growing destination for holidays in the warm waters of the Indian Ocean surrounding the East coast of this island.

Why surrounding? Simple; just that Sunsiyam Pasicuda perched by the sea, apart from the warm waters bordering the resort; we are also of the positive atmosphere of the shallow sea abutting the picturesque appeal viewed from the sea. Appealing to tourists already enjoying the numerous attractions of this resort facility.

Our observations were French, Germans and other Europeans were already enjoying the facilities of Sunsiyam Pasicuda.

General Manager Arshed Refai was on hand to give us detailed explanation on facilities guests could expect and enjoy and numerous offerings that appeal for long stays. Quite regularly, he said, guests are quite reluctant to depart. Particularly Europeans who we observed enjoying the sun and more so walks along the beach.

Two flights each week bring tourists from Colombo who prefer the resort atmosphere of the East coast, more so attractions of Sunsiyam Pasecuda. Additionally, Ministry of Tourism provided train services as well to encourage tourist traffic to the East to enjoy the growing popularity of this resort and other resorts we observed in the area.

GM Refai further said the dining experience, and varied choice of cuisine catered to each national from West to East; which, he said, was quite in order to cater to choices in food and individual taste desires.

Formal opening of the hotel was in 2014 and was classified a Luxury Boutique Hotel. ‘Was it popular among local tourists’? He responded positively that its appeal was growing, related to the chain of other destinations in the East. Additionally, its popularity and appeal, particularly to its chalets and Five Star luxury was in reality not an available concept elsewhere.

Chef Dilan Jayasundera, explained varied cuisine and food flavours he was adept in producing to ensure guests were not in need, food vice.

He further said a broad cross section of tastes was catered to.

Asst General Manager Keerthi expanding on additional facilities said 34 rooms were villa style accommodation spread over the land. Four ocean pavilions complemented a formal atmosphere.

GM Refai further said 90 guests at peak accommodation enjoyed international cuisine.

Excursions, to the fish market, sea observations in glass bottom boats to observe fauna and flora under water, including the varied amphibian fish population were of great appeal.

Questioned on any Maldivian influence, he said, Sunsiyam was not influenced by the Maldives, but its style was of broad appeal.

By Steve A. Morrell

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