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IMF tells SL how to save economy

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The Executive Board of the IMF has asked Sri Lanka to reform state-owned enterprises and adopt cost-recovery energy pricing, the Fund said yesterday in a press release.

They also called for prudent management of the Colombo Port City project, and continued efforts to strengthen governance and fight corruption.

The IMF stated that further efforts are needed to diversify the economy, phase out import restrictions, and improve the business and investment climate in general.

The Directors also called for renewed efforts on growth-enhancing structural reforms and stressed the importance of increasing female labor force participation and reducing youth unemployment.

Below are the rest of the IMF release: “(IMF) concluded the Article IV consultation with Sri Lanka on February 25, 2022. Sri Lanka has been hit hard by COVID-19. On the eve of the pandemic, the country was highly vulnerable to external shocks owing to inadequate external buffers and high risks to public debt sustainability, exacerbated by the Easter Sunday terrorist attacks in 2019 and major policy changes including large tax cuts at late 2019. Real GDP contracted by 3.6 percent in 2020, due to a loss of tourism receipts and necessary lockdown measures. Sri Lanka lost access to the international sovereign bond market at the onset of the pandemic.

The authorities deployed a prompt and broad-based set of relief measures to cope with the impact of the pandemic, including macroeconomic policy stimulus, an increase in social safety net spending, and loan repayment moratoria for affected businesses. These measures were complemented by a strong vaccination drive. GDP growth is projected to have recovered to 3.6 percent in 2021, with mobility indicators largely back to their pre-pandemic levels and tourist arrivals starting to recover in late 2021.

“Nonetheless, annual fiscal deficits exceeded 10 percent of GDP in 2020 and 2021, due to the pre-pandemic tax cuts, weak revenue performance in the wake of the pandemic, and expenditure measures to combat the pandemic. Limited availability of external financing for the government has resulted in a large amount of central bank direct financing of the budget. Public debt is projected to have risen from 94 percent of GDP in 2019 to 119 percent of GDP in 2021. Large foreign exchange (FX) debt service payments by the government and a wider current account deficit have led to a significant FX shortage in the economy. The official exchange rate has been effectively pegged to the U.S. dollar since April 2021.

“The economic outlook is constrained by Sri Lanka’s debt overhang as well as persistently large fiscal and balance-of-payments financing needs. GDP growth is projected to be negatively affected by the impact of the FX shortage and macroeconomic imbalances on economic activities and business confidence. Inflation recently accelerated to 14 percent (y/y) in January 20223 and is projected to remain double-digit in the coming quarters, exceeding the target band of 4–6 percent, as strong inflationary pressures have built up from both supply and demand sides since mid-2021. Under current policies and the authorities’ commitment to preserve the tax cuts, the fiscal deficit is projected to remain large over 2022–26, raising public debt further over the medium term. Due to persistent external debt service burden, international reserves would remain inadequate, despite the authorities’ ongoing efforts to secure FX financing from external sources.

“The outlook is subject to large uncertainties with risks tilted to the downside. Unless the fiscal and balance-of-payments financing needs are met, the country could experience significant contractions in imports and private credit growth, or monetary instability in case of further central bank financing of fiscal deficits. Additional downside risks include a COVID-19 resurgence, rising commodity prices, worse-than-expected agricultural production, a potential

deterioration in banks’ asset quality, and extreme weather events. Upside risks include a faster-than-expected tourism recovery and stronger-than-projected FDI inflows.

“Executive Directors commended the Sri Lankan authorities for the prompt policy response and successful vaccination drive, which have cushioned the impact of the pandemic. Despite the ongoing economic recovery, Directors noted that the country faces mounting challenges, including public debt that has risen to unsustainable levels, low international reserves, and persistently large financing needs in the coming years. Against this backdrop, they stressed the urgency of implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability, while protecting vulnerable groups and reducing poverty through strengthened, well-targeted social safety nets.

“Directors emphasized the need for an ambitious fiscal consolidation that is based on high-quality revenue measures. Noting Sri Lanka’s low tax-to-GDP ratio, they saw scope for raising income tax and VAT rates and minimizing exemptions, complemented with revenue administration reform. Directors encouraged continued improvements to expenditure rationalization, budget formulation and execution, and the fiscal rule. They also encouraged the authorities to reform state-owned enterprises and adopt cost-recovery energy pricing. Directors agreed that a tighter monetary policy stance is needed to contain rising inflationary pressures, while phasing out the central bank’s direct financing of budget deficits. They also recommended a gradual return to a market-determined and flexible exchange rate to facilitate external adjustment and rebuild international reserves. Directors called on the authorities to

gradually unwind capital flow management measures as conditions permit.

“Directors welcomed the policy actions that helped mitigate the impact of the pandemic on the financial sector. Noting financial stability risks from the public debt overhang and sovereign-bank nexus, they recommended close monitoring of underlying asset quality and identifying vulnerabilities through stress testing. Directors welcomed ongoing legislative reforms to strengthen the regulatory, supervisory, and resolution frameworks.

Directors called for renewed efforts on growth-enhancing structural reforms.”



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Only single MP refuses salary as Parliament details pays and allowances

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SJB Badulla District MP Nayana Wasalathilake is the only MP to forego salary and allowances, with all payments suspended following his written notification on August 20, 2025.

Only one Member of Parliament has chosen not to receive the salaries and allowances entitled to MPs, Prime Minister Dr. Harini Amarasuriya revealed in Parliament last Thursday, shedding light on the financial perks enjoyed by members of the Tenth Parliament.

Speaking on Thursday (Feb. 19) in response to a question from SJB Badulla District MP Chaminda Wijesiri, the Prime Minister outlined the full range of pay and allowances provided to parliamentarians.

According to Dr. Amarasuriya, MPs receive a monthly allowance of Rs. 54,285, an entertainment allowance of Rs. 1,000, and a driver’s allowance of Rs. 3,500—though MPs provided with a driver through the Ministry of Public Security and Parliamentary Affairs are not eligible for the driver’s allowance.

Additional benefits include a telephone allowance of Rs. 50,000, a transport allowance of Rs. 15,000, and an office allowance of Rs. 100,000. MPs are also paid a daily sitting allowance of Rs. 2,500 for attending parliamentary sessions, with an additional Rs. 2,500 per day for participation in parliamentary sittings and Rs. 2,500 per day as a committee allowance.

Committee meetings held on non-parliament sitting days also attract Rs. 2,500 per day.

Fuel allowances are provided based on the distance between an MP’s electoral district and Parliament. National List MPs are entitled to a monthly allocation equivalent to 419.76 litres of diesel at the market price on the first day of each month.

Despite the comprehensive benefits, only SJB Badulla District MP Nayana Wasalathilaka has opted not to draw a salary or allowances. Dr. Amarasuriya said that in accordance with a written notification submitted by MP Wasalathilaka on August 20, 2025, payments have been suspended since that date.

The Prime Minister also confirmed that she, along with the Speaker, Deputy Speaker, committee chairs, ministers, deputy ministers, the Opposition Leader, and senior opposition whips, have all informed the Secretary-General of Parliament in writing that they will not claim the fuel allowance.

Challenging the ruling party’s voluntary pledge to forgo salaries, MP Wijesiri pointed out that all MPs except Wasalathilaka continue to receive their salaries and allowances. “On one hand you speak about the people’s mandate, which is good. But the mandate also included people who said they would voluntarily serve in this Parliament without salaries. Today we have been able to prove, Hon. Speaker, that except for one SJB MP, the other 224 Members are drawing parliamentary salaries,” he said.

The Prime Minister responded by defending the political culture and practice of allocating portions of MPs’ salaries to party funds. Referring to previous practices by the JVP and NPP, she said: “It is no secret to the country that the JVP has for a long time not personally taken MPs’ salaries or any allowances. I think the entire country knows that these go to a party fund. That is not new, nor is it something special to mention. The NPP operates in the same way. That too is not new; it is the culture of our political movement.”

When MP Wijesiri posed a supplementary question asking whether diverting salaries to party funds was an indirect method of taking care of MPs, Dr. Amarasuriya said: “There is no issue there. No question was raised; the Member made a statement. What we have seen throughout this week is an inability to understand our political culture and practice, and a clash with decisions taken by political movements that misused public funds. What is coming out is a certain mindset. That is why there is such an effort to find fault with the 159. None of these facts are new to people. He did not ask a question, so I have nothing to answer.”

The disclosures come days after the Government moved to abolish the parliamentary pension, a measure that has sparked renewed debate over MP compensation and the transparency of funds allocation.

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Illegal assets of underworld figures frozen since September, Minister tells parliament

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Wijepala

Public Security and Parliamentary Affairs Minister Ananda Wijepala on Friday (20) disclosed in Parliament details of properties and assets allegedly acquired through illegal activities by suspects arrested in raids carried out since September last year.

The Minister made the disclosure in response to a question raised by MP Ravindra Bandara, stating that the identified assets have been frozen pending further investigations.

He said the assets include properties belonging to several alleged organised crime figures, among them Mandinu Padmasiri, alias ‘Kehelbaddara Padme’, who was arrested last year.

Listing the assets in the House, the Minister said Hapugoda Arachchige Kankanamge Duminda Dilruk has assets worth Rs. 23 million frozen, including a van, a motorcycle, a house and a roller gate.

In the case of Kandaiya Kalamogan, two motorboats have been identified, although their value has not yet been assessed.

Dilum Tharaka Balasuriya is reported to own a two-storey house situated on 15 perches of land with a face value of Rs. 800,000.

Assets belonging to Mohammad Harish Mohammad and Mohammad Shiyam were frozen on January 21, 2026. While the total value has not yet been assessed, five vehicles were confiscated from the former and a car from the latter.

Wijesuriya Mahaduruge Uditha Iroshan Wijesiri has assets valued at Rs. 5 million, including a lorry, while Indika Pathmakumara’s assets include a cab worth Rs. 2.5 million and a bank account containing Rs. 1 million.

Lahiru Sampath is reported to own a three-wheeler valued at Rs. 1.8 million.

According to the Minister, Hettiarachchige Dona Sriyani Chandralatha possesses a four-storey house and 14.7 perches of land valued at Rs. 60 million.

Mandinu Padmasiri, alias ‘Kehelbaddara Padme’, owns 20 perches of land with partially constructed buildings valued at Rs. 30 million and a half-finished six-room building worth Rs. 20 million, the Minister said.

Patabendi Maddumage Shehan Sathsara, alias ‘Dehi Bale Malli’, has five multi-day fishing trawlers valued at Rs. 200 million and a two-storey house with 15.8 perches of land worth Rs. 50 million.

The Minister further disclosed that Jayasinghege Maduranga Sampath owns a cab worth Rs. 5.4 million, a van valued at Rs. 14.5 million, five bank accounts containing Rs. 73.03 million, another account with Rs. 160,328.88 and USD 544, and Rs. 283 million in cash.

Adhikari Samantha Perera is reported to own 10.10 perches of land valued at Rs. 5 million and one acre and 1.5 perches of land worth Rs. 13 million.The Minister said investigations are continuing in respect of the suspects and the frozen assets.

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Entire coal procurement rigged, SJB charges minister over substandard fuel

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Marikkar

The entire coal procurement process was rigged, the main Opposition SJB alleged in Parliament on Friday, accusing Energy Minister Eng. Kumara Jayakody of misleading the Cabinet and the National Procurement Committee to favour a supplier of substandard coal for the Lakvijaya Coal Power Plant in Norochcholai.

Moving an adjournment debate on the energy crisis, SJB Colombo District MP S.M. Marikkar charged that the losses incurred from the importation of inferior coal must be fully computed and recovered from those responsible, including damage caused to machinery, additional power generation costs and environmental harm.

He said the SJB had exposed the issue both inside and outside Parliament, alleging that the Government was attempting to cover up large-scale irregularities in the 2026 coal procurement process.

Marikkar claimed that serious fraud, corruption and procedural violations had taken place from the outset. He pointed out that the standard 42-day procurement period had been curtailed to 21 days, thereby restricting competition and preventing many qualified companies from participating.

He further alleged that key eligibility criteria had been diluted, including the requirement that a supplier must have imported 500,000 metric tonnes of coal over the past three years. This threshold, he said, had been reduced to 100,000 metric tonnes to enable smaller firms to qualify.

According to the MP, despite instructions issued by the Committee on Public Finance and the Auditor General regarding the procurement process, the Minister had misled the Cabinet and the National Procurement Committee to deviate from the approved procedure in order to favour a particular company that subsequently supplied substandard coal.

Marikkar alleged that the first, third and fourth shipments had contained inferior coal, which had been mixed with existing higher-quality stocks and used at the Norochcholai plant. He said the resulting losses to the power generation system would far exceed the reported US$ 2 million fine imposed on the importer.

He also highlighted alleged irregularities in the tender process, claiming that the chairman of the tender board had withdrawn after decisions were taken and had failed to attend subsequent meetings.The MP further charged that the Government was attempting to justify impending power cuts by citing a purported shortage of coal.

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