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Lanka awaiting assurances from India, China, says Central Bank Governor
By Meera Sirinivasan
Sri Lanka is waiting for financing assurances from its bilateral creditors, including India and China, to tap support from the International Monetary Fund (IMF), according to Central Bank Governor P. Nandalal Weerasinghe.
In September, the IMF reached a staff level agreement with Sri Lanka for a $2.9 billion package to help the island nation facing its worst economic crisis in decades. The development came months after Sri Lanka floated the rupee, opted for a preemptive default on its external debt, and increased interest rates sharply to tighten monetary policy.
However, Sri Lanka must now obtain adequate financing assurances from its creditors, for the IMF Board to approve the promised Extended Fund Facility (EFF). Colombo is desperate for the $2.9 billion not because it is a big amount — it can barely meet two months’ worth of imports — but mainly to use the IMF package to qualify for more credit internationally, as the country struggles to recover from the dreadful economic crash that pushed citizens to the streets. Spanning months, the mass protests ousted the former Rajapaksa administration. President Ranil Wickremesinghe, who was elected through a parliamentary vote, has vowed to rebuild the island’s devastated economy, while repeatedly acknowledging the enormous challenge the task entails.
Over the past few months, Sri Lanka has been in talks with China, Japan, and India — its three major bilateral creditors — to restructure the billions of dollars owed to them. “We have shared all the information possible with our bilateral creditors, on an open, comparable, and transparent basis. Now they will have to look at it, make their decisions internally and come back to us…we hope they will do that soon,” the Governor of the apex Bank told The Hindu in an interview at his office on Tuesday. From the time the Sri Lankan government entered the provisional agreement with the IMF, India has underscored the need for “creditor equitability and transparency”, implying Colombo must not give any creditor preferential treatment while restructuring their loans.
Although Sri Lanka aimed to secure IMF relief before the end of this year it failed to, as bilateral negotiations dragged. Talks with China got a “little delayed”, Governor Weerasinghe observed, citing “internal issues” such as the Chinese Communist Party (CCP)’s national congress held in October, and “COVID-19 restrictions” in China.
But the delay in discussions with China “is not the only reason” for Sri Lanka’s inability to secure the IMF package this year, in his view. Japan, and the Paris Club of which it is a member, “know this business” [of debt restructure] as they have “been doing it for many years”, he said. “Because of that, they are more advanced in their engagement. They have done the analysis and shared it with non-Paris Club members like India and China,” Weerasinghe said, adding: “Now, it is up to them.” After the creditors provide financing assurances, it would likely take the IMF Board four to six weeks to approve the package, he said.
In addition to bilateral loans, the island nation has over the years borrowed heavily from private creditors, the country’s largest external credit source, holding nearly $13 billion of its outstanding debt, apart from multilateral agencies. The focus, however, is on bilateral creditors whose role is key for Sri Lanka to obtain crucial IMF support. Multilateral loans, taken on low-interest and over a long term, will not be restructured, and the actual negotiation with commercial creditors will commence only after the IMF programme kicks in, according to the Governor.
With Colombo’s decision to default on its $51-billion foreign debt — the Governor maintained it was a “debt standstill” as against a hard default — its subsequent move limiting imports to essentials, the nearly $4 billion Indian assistance and some repurposed funds, Sri Lanka waded through the last few months, despite unsuccessful attempts to obtain bridge financing. “We can manage without bridge financing now, that is how we have been managing since July,” Weerasinghe said. “With our export proceeds, worker remittances, and some support from the Asian Development Bank and World Bank we can manage,” he said.
The Central Bank recently said there was a “notable contraction” in merchandise trade deficit in October 2022, compared to the previous year, even as Sri Lanka’s imports continue to exceed exports by millions of dollars. “Exports will probably be coming down because global demand is also going down…and obviously that will impact imports as well.”
While Sri Lankan economists contend that the economy is still on a precarious path, the senior official sought to project a more hopeful picture, pitching earnings from tourism and remittances as “additional benefits”. Official data showed earnings from tourism crossed over $1 billion from January to October 2022, while workers’ remittances went up to $3 billion during the period.
On how Sri Lanka planned to exit the cycle of debt going forward, Weerasinghe said Sri Lanka was looking at more “concessional, long-term loans” only from multilateral agencies. “And the relief we are expecting from other creditors is a grace period and maturity extensions so that our debt service burden in the next few years will be much lower than if we did not opt for debt restructure,” he said. Sri Lanka has debt service commitments to the tune of $6 billion a year for the next several years. “So, what we are seeking from our creditors is some relief, so we repay this over the next 20 years rather than in the next four, five years.”
Reflecting on Sri Lanka’s past tendency in borrowings, Weerasinghe observed that it was a mistake that the country borrowed externally and spent locally, rather than use the funds to boost the country’s capacity, including in exports that would have equipped Sri Lanka to repay the loans from its own earnings. “That was the problem”, he said. (The Hindu)
Prime Minister Dr. Harini Amarasuriya stated that the Government stands ready to support the University of Peradeniya in rebuilding stronger, safer, and more resilient than before. She made these remarks while visiting the University of Peradeniya on Sunday (07), where she met with student representatives and Heads of Departments affected by the sudden floods that swept through the campus on 27 November.
The visit aimed to personally inspect the damage, which caused extensive harm to academic buildings, student facilities, and key infrastructure. University officials briefed the Prime Minister on the severity of the impact, highlighting significant losses to the Faculties of Management, Agriculture, and Veterinary Medicine, as well as the IT Centre, CDCE, gymnasium, swimming pool, and playgrounds.
The Prime Minister was also briefed on how the disaster disrupted both academic activities and the wellbeing of students and staff, including the loss of more than 110 computers, vital laboratory equipment, examination documents, and four central IT servers, with preliminary damage estimates exceeding Rs. 6 billion. She commended the swift evacuation of nearly 750 students from hostels located along the Mahaweli River and acknowledged the resilience shown by nearly 11,000 students who remained on campus during the crisis.
She expressed her appreciation to the Sri Lanka Army, the Disaster Management Centre, and local donors for providing food, water, and essential supplies at a time when access and communication were severely disrupted.
A joint engineering team has confirmed that university buildings remain structurally stable, although several require urgent repairs. With academic activities suspended until 15 December.
The Prime Minister discussed with the Vice Chancellor and emergency response teams the immediate steps required to restore normalcy and provide necessary support to students whose studies and daily routines have been significantly affected.
During these discussions, the Prime Minister issued a series of directives focusing on both immediate relief and long-term safety. These include restoring essential services such as water, electricity, and safe access pathways for students; accelerating the rehabilitation of heavily damaged faculties and laboratories; strengthening early warning systems for flood-prone areas; and implementing long-term mitigation measures such as riverbank protection, improved drainage, and the relocation of vulnerable facilities. She also directed the relevant agencies to fast-track government assistance, assuring the university community that the Government stands ready to help Peradeniya rebuild stronger, safer, and more resilient than before.
The meeting was attended by Nalaka Kaluwewa, Secretary to the Ministry of Education, Higher Education and Vocational Education; Kandy District Parliamentarian Thanura Dissanayake, Professor Terrence Madhujith, Vice Chancellor of the University of Peradeniya; and Professor R. W. Pallegama, Deputy Vice Chancellor of the University of Peradeniya, along with Heads of Departments, officials, and student representatives of the University of Peradeniya.
[Prime minister’s media division]
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Level III landslide early warnings issued to the Districts of Kandy, Kegalle, Kurunegala and Matale extended till 1600 hrs on Tuesday [09]
The Level III RED landslide warnings issued to the districts of Kandy, Kegalle, Kurunegala and Matale by the landslide early warning center of the National Building Research Organisation [NBRO] have been extended till 1600 hrs on 09th December 2025.
Accordingly,
The LEVEL III RED warnings issued to the Divisional Secretaries Divisions and surrounding areas of Hatharaliyadda, Yatinuwara, Ududumbara, Pathahewaheta, Medadumbara, Pasbage Korale, Deltota, Poojapitiya, Ganga Ihala Korale, Panvila, Gangawata Korale, Udapalatha, Harispattuwa, Kundasale, Minipe, Doluwa, Thumpane, Akurana, Udunuwara and Pathadumbara in the Kandy district, Kegalle, Galigamuwa, Mawanella, Bulathkohupitiya, Aranayaka, Yatiyanthota, Rambukkana and Warakapola in the Kegalle district, Mawathagama, Mallawapitiya and Rideegama in the Kurunegala district, and Naula, Wilgamuwa, Pallepola, Ambanganga Korale, Laggala Pallegama, Ukuwela, Rattota, Matale and Yatawatta in the Matale district have been extended.
In the meantime,
LEVEL II AMBER warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Uva Paranagama, Meegahakivula, Badulla, Kandeketiya, Bandarawela, Soranathota, Hali_Ela, Ella, Lunugala, Welimada, Haputhale, Passara and Haldummulla in the Badulla district, Dehiowita, Ruwanwella and Deraniyagala in the Kegalle district, Alawwa and Polgahawela in the Kurunegala district, Ambagamuwa Korale, Hanguranketha, Mathurata, Norwood, Kothmale West, Nuwara Eliya, Thalawakele, Nildandahinna, Walapane and Kothmale East in the Nuwara Eliya district, and Kahawatta, Godakawela and Kolonne in the Ratnapura district.
LEVEL I YELLOW warnings have been issued to the Divisional Secretaries Divisions and surrounding areas of Yakkalamulla and Elpitiya in the Galle district, Attanagalla, Mirigama and Divulapitiya in the Gampaha district, Narammala in the Kurunegala district, and Eheliyagoda, Opanayake, Kalawana, Imbulpe, Kaltota, Kiriella, Kuruwita, Nivithigala, Ayagama, Pelmadulla, Balangoda, Elapatha and Ratnapura in the Ratnapura district
A special District Coordinating Committee meeting, convened to review the damage caused to the agricultural sector in the Nuwara Eliya District due to Cyclone Ditwah and to discuss the urgent measures required, was held this morning (08) at the Nuwara Eliya District Secretariat. The meeting was chaired by President Anura Kumara Dissanayake, with the participation of the relevant responsible officials.
Due to adverse weather conditions, 1,421 hectares of vegetable cultivation in the Nuwara Eliya District has been damaged. President Anura Kumara Dissanayake instructed the relevant officials to take the necessary measures to provide compensation to farmers without delay.
Officials stated that although there has been crop damage, the reduction in the vegetable harvest in the Nuwara Eliya District would be around 25%. They added that Nuwara Eliya district would be able to meet the daily demand, but a decrease in the daily demand has been observed.
Officials further pointed out to the President that the reason for this decline is the spread of false information claiming a vegetable shortage in the Nuwara Eliya District and that prices have excessively increased.
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