Connect with us

News

IMF wants Sri Lanka to continue austerity

Published

on

Budget 2025 needs to be underpinned by appropriate revenue measures and continued spending restraint 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 IMF said in a statement on Friday (02).

An IMF mission team, led by Senior Mission Chief, Peter Breuer, visited Sri Lanka from 25 July 25 to 02 August 2024, to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the authorities’ economic reform programme, supported by the IMF’s Extended Fund Facility (EFF) arrangement.

Breuer issued the following statement yesterday.

“The economic reform programme 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 programme 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 programme, 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 programme 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 Mr. 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.”



Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Current El Niño Status in Sri Lanka

Published

on

By

At present, El Niño conditions have developed and are classified as being at a weak level. Forecasts indicate a 63% probability of a very strong El Niño event developing during the period from November 2026 to January 2027. According to the National Oceanic and Atmospheric Administration (NOAA), there is approximately a one-third probability that El Niño will remain below a very strong intensity.

Typical Climatic Conditions Associated with El Niño
Based on analyses of past El Niño events that occurred between 1950 and 2025:
• Rainfall during July and August may be below normal, particularly in the dry zone areas.
• From October onward, rainfall is generally expected to be above normal.
• If a positive Indian Ocean Dipole (IOD) develops, enhanced rainfall conditions may continue until December.

Sectors Requiring Attention
• Appropriate measures should be taken for water resource management during July and August.
• Increased rainfall expected from October onward may lead to floods and landslides, requiring preparedness and close monitoring. The forecasts are important for sectors such as, Agriculture /Water management /Livestock /Health /Energy /Other climate-sensitive sectors
• Attention should be paid to official information issued by the Department of Meteorology.

Actions by the Department of Meteorology
The Department of Meteorology continuously monitors the evolving situation and issues:
• Weekly and monthly seasonal forecasts and Monthly analyses of rainfall data to monitor meteorological drought conditions.
As weather conditions are influenced not only by El Niño but also by other climatic factors, updated forecasts and advisories are regularly shared with relevant stakeholder organizations (Irrigation/ Water Management Committee /Department of Agriculture/National Building Research Institute/Disaster Management Centre (DMC)/Ministry of Health /Sri Lanka Land Development Corporation…etc). The Department also provides technical support to the committee established through a Cabinet decision to address climate-related impacts. The Department’s monthly rainfall outlook for July to September 2026 is attached

Monthly Rainfall Forecasts for July, August and September 2026
Month Rainfall forecast
July 2026

During July 2026, there is a higher probability of having near normal rainfall across most parts of the Western and Southern Provinces. The remainder of the country is expected to experience below normal rainfall.

August 2026

There is a higher probability of having below normal rainfall across most parts of the country during month of August 2026.

September 2026

There is a possibility of above-normal rainfall across most parts of the Western and Southern Provinces, while near-normal rainfall is expected in the Sabaragamuwa Province. Below-normal rainfall is likely in the remaining areas during September 2026.

Note: These long-range forecasts may change due to strong day-to-day atmospheric variability associated with the movement of weather systems such as atmospheric disturbances, low-pressure areas, and depressions, as well as intra-seasonal oscillations such as the Madden–Julian Oscillation (MJO). Therefore, in addition to the weekly and monthly forecasts, it is important to pay attention to the Department’s official announcements, weather advisories and warnings, as well as the daily weather forecasts issued by the Department of Meteorology.

Continue Reading

News

Govt. move to extend retirement ages of top judges: Opp. complains to UN

Published

on

Prof. Peiris addresses the media outside the UN compound in Colombo on Thursday on the controversial government move to extend the retirement ages of Superior Court judges, while former MPs Thalatha Atukorale, Dr Suren Raghavan and Premanath C. Dolawatta look on.

Former External Affairs Minister Prof. G. L. Peiris yesterday (15) briefed the UN Resident Coordinator in Colombo, Marc-André Franche, on President Anura Kumara Dissanayake’s move to extend the retirement ages of the superior court judges and the delay in filling the vacancies in the Supreme Court and the Court of Appeal.

Prof. Peiris, the convenor of the People’s Joint Opposition, led the delegation that included UNP General Secretary and former Minister Thalatha Atukorale, former UPFA National List parliamentarian Suren Raghavan and ex- SLPP MP Premnath C. Dolawatta.

Having met the top official here, Prof. Peiris briefed the media on their decision to bring the developing situation to the notice of the UN.

Referring to the opposition of the legal fraternity to the NPP government’s plan, Prof. Peiris emphasised that the civil society, too, had opposed the politically motivated initiative.

Prof. Peiris said that instead of addressing the burning issues affecting the public, the government was creating new problems.

Continue Reading

News

Dengue surge pushes hospitals to the brink as cases near 70,000

Published

on

A week-long crackdown to begin in 11 districts

Hospitals are coming under mounting pressure as the country’s dengue epidemic gathers pace, with nearly 70,000 infections and 48 deaths reported so far this year, prompting health authorities to launch an intensive week-long mosquito control campaign in 11 districts.

The National Dengue Control Unit (NDCU) said 69,951 dengue cases had been reported by July 13, with 14,572 new infections recorded during the first 13 days of July alone. June saw the highest monthly caseload of the year, underlining the rapid spread of the mosquito-borne disease during the southwest monsoon.

Acting Director of the NDCU, Dr. Kapila Kannangara, warned that the hospital system was facing severe congestion due to the unprecedented influx of dengue patients.

“We are seeing an alarming increase in admissions. Hospitals are under tremendous pressure, and public cooperation is essential to bring the outbreak under control,” he said, announcing that a special one-week dengue control programme would be implemented across 11 high-risk districts.

Health authorities have identified 175 Medical Officer of Health (MOH) divisions as high-risk dengue zones. Public Health Inspectors will conduct inspections, eliminate mosquito breeding sites and initiate legal action against those maintaining mosquito-infested premises.

The Western Province continues to account for the largest share of infections, with Gampaha and Colombo among the worst-affected districts. Several hospitals are already operating beyond capacity as the number of admissions continues to climb.

Health officials attributed the surge to intermittent rains, poor waste disposal, stagnant water collections and inadequate community participation in vector control programmes.

The Ministry of Health has appealed to local authorities, schools, workplaces, religious institutions and households to inspect their premises regularly, clear blocked drains and roof gutters, cover water storage containers and remove discarded tyres, cans, bottles and other containers capable of collecting rainwater.

Medical experts urged the public not to ignore symptoms such as persistent fever, severe headache, pain behind the eyes, vomiting, abdominal pain and bleeding manifestations, stressing that early medical treatment is critical in preventing severe dengue and deaths.

Officials emphasised that eliminating mosquito breeding sites remains the single most effective way of controlling dengue, warning that unless communities actively participate, the outbreak could worsen during the ongoing rainy season.

With daily case numbers continuing to rise and hospitals struggling to cope, health authorities said the coming weeks would be crucial in determining whether the country can curb one of its worst dengue outbreaks in recent years.

By Ifham Nizam

Continue Reading

Trending