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Lanka eyes default exit by December; IMF review completion after budget: CB Governor

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By INDIKA SAKALASOORIYA

ECONOMYNEXT (Washington): Sri Lanka aims to conclude its debt restructuring process by year-end, with expectations for a prompt exit from the default rating category soon after, Central Bank Governor Nandalal Weerasinghe told Economynext in an interview in Washington, D.C. this week.

“To complete the process, certain procedures must be followed, including documentation, due diligence, and related formalities,” Weerasinghe said.

“It will take 2-3 weeks to complete the debt exchange and get the investor participation. That will take some time. The idea is to complete before end-December,” Weerasinghe said.

Backed by the International Monetary Fund (IMF) and international advisors, Sri Lanka has secured a debt restructuring agreement with its official creditors and reached an in-principle deal with the private creditors.

The arrangement with the bondholders includes macro-linked bonds tied to the island nation’s economic growth trajectory.

Sri Lanka is also expected to finalise a debt deal with China Development Bank and pursue debt treatment

deals with other remaining official and private creditors, holding less than a billion dollars worth of debt by the end of 2023.Governor Weerasinghe also expressed confidence that Sri Lanka’s default rating would see an upgrade shortly after the debt restructuring process is finalised.

“We met with all the ratings agencies here in Washington. They obviously mentioned that they will follow the normal procedure. Once we start repaying our obligations, we will come out of the selective default or the restrictive default category,” he said.

“Then we’ll be starting with normal CCC or depending on the outlook we will get a better rating. The immediate action would be to remove Sri Lanka from the default category.”

Weerasinghe noted that completion of the third review of the IMF loan deal will be delayed, as a staff-level agreement in this regard will be entered in by late November or early December.

The third review of Sri Lanka’s $3 billion, 48-month Extended Fund Facility (EFF) was initially scheduled for completion in December.

However, the October presidential election and the delay in submitting next year’s budget to Parliament have postponed the timeline.

“The government has expressed their willingness to complete the third review and go ahead with the debt restructuring. The president made this statement. So on that basis, an IMF team came to Sri Lanka and then we continued the discussions here (Washington),” Governor Weerasinghe said.

“This is a review mission. We are here trying to negotiate and complete the review as soon as possible. Obviously, there will be a delay because there is no parliament.”

“The third review should have been completed by end-December. That was the original timeline. But there were prior actions like submitting the budget to the Parliament for next year.”

“What we are trying to do is to at least to reach a staff level agreement with the fund to complete the third review. Once we have discussions here, there will be elections. Soon after that a new Cabinet will be appointed and a parliament established. Then the mission will be there to complete and announce the staff level agreement.”

Sri Lanka is scheduled to hold polls to elect new members to the Parliament on November 14.

While a staff-level agreement could be finalised by early December, the IMF Executive Board approval is likely to be delayed as Sri Lanka must first complete the prior action of presenting next year’s budget to Parliament.

“Going to the board will be delayed because for the compilation of the third review we have some prior actions such as submitting a budget to the parliament for the next year. That will happen during the first three months of the year. Then there will be a vote on account,” Weerasinghe said.

“Because of this, there will be a delay in the completion of the third review. Soon after the new government establishes a cabinet and a proper government, that’s their invitation to start the staff-level agreement.”

Out of the $3 billion IMF facility, Sri Lanka has up to now received approximately US$ 1 billion in three tranches.



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Workshop Explores Integration of Enterprise Development Programmes with the “Prajashakthi” National Movement

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A special workshop was held today (06) at the Presidential Secretariat to explore the possibility of integrating programmes currently implemented by state institutions that directly contribute to enterprise development with the “Prajashakthi” National Movement.

Discussions focused on identifying development projects undertaken by government institutions for micro, small and medium-sized enterprises (MSMEs) and incorporating relevant information into a unified data management system.

Attention was also directed towards formulating a strategic framework for the coordinated implementation of these programmes, as well as identifying the nature, scope and eligibility criteria of the initiatives carried out by the respective institutions.

The participating government officials were further briefed on the criteria for selecting beneficiaries for programmes directly related to enterprise development.

In addition, discussions centred on identifying programmes that could be implemented independently or jointly by the relevant state institutions and the “Prajashakthi” National Movement. Particular attention was paid to preventing duplication and overlap in programme selection and implementation.

Senior Additional Secretary to the President Kapila Janaka Bandara, Secretary to the Ministry of Rural Development, Social Security and Community Empowerment Sampath Manthrinayake, resource persons Kalum Jayaveera and Madhava Muthukudaarachchi, officials of the Ministry of Rural Development, Social Security and Community Empowerment, government officials, and representatives of the Prajashakthi Secretariat were among those who attended the workshop.

(PMD)

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Pakistan naval trio leaves Colombo after goodwill visit

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Wrapping up their goodwill and replenishment visit, the Pakistan Navy ships ‘PNS Taimur’ and ‘PNS Aslat’, along with the submarine ‘PNS/M Hangor’, departed the island on 04 Jun 26. The naval units, which arrived in Sri Lanka on 01 June, were accorded a traditional naval send-off by the Sri Lanka Navy at the Port of Colombo, upon their departure.

During their stay, the Commanding Officers of Pakistan Navy ships and submarine called on the Commander Western Naval Area and the Flag Officer Commanding Naval Fleet at the Western Naval Command Headquarters, where discussions were held on several matters of mutual interest.

Meanwhile, Sri Lanka Navy personnel had the opportunity to visit the visiting Pakistan Navy ships and submarine. Furthermore, the crews of the visiting vessels explored the rich heritage of Sri Lanka, taking time to tour several culturally significant landmarks across the island.

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China, Lanka intensify cooperation to fight cross-border crimes spreading across Asia and beyond

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China and Sri Lanka have intensified joint law enforcement efforts to combat cross-border online gambling and telecom fraud, crimes that authorities warn are increasingly spreading across Asia and beyond.

The Chinese Embassy in Colombo said both countries are working closely to dismantle scam centres and fraud networks that have relocated to Sri Lanka from other parts of Southeast Asia. The Embassy noted that such operations often intertwine with human trafficking and other serious crimes, posing grave risks to public security and social stability.

China’s position on cross-border gambling remains firm: Chinese capital is prohibited from investing in overseas casinos, citizens are barred from operating them, and foreign casinos are forbidden from soliciting Chinese nationals. The Embassy stressed that gambling “almost invariably leads to financial ruin,” with tens of thousands of Chinese citizens suffering losses and harm. Recent amendments to China’s Criminal Law have criminalised cross-border gambling activities.

The Embassy pointed out that Sri Lankan authorities have carried out multiple raids in recent months, dismantling gambling and fraud dens and arresting suspects from several countries. Several Chinese nationals, involved in fraud-related crimes, have been handed over to Chinese authorities, producing what officials described as a strong deterrent effect.

The Chinese Embassy praised the efforts of Sri Lanka’s ministries of Foreign Affairs, Finance, and Public Security, particularly immigration and police officials, for their cooperation.

It warned that without firm and immediate measures, the spread of illegal gambling and fraud could damage Sri Lanka’s international image, undermine social stability, and harm the safety and security of its people.

China has already conducted similar law enforcement cooperation with countries including Spain, the UAE, Myanmar, and Cambodia, leading to arrests and repatriations of overseas fraud suspects. It has also proposed the creation of an international alliance against telecom and online fraud to coordinate global efforts, it said.

Going forward, China pledged to actively implement the Global Security Initiative and Global Civilization Initiative, while continuing to deepen law enforcement and security cooperation with Sri Lanka.

The Embassy said these efforts aim to safeguard lives and property, protect financial security, and build a “clean, safe, and beautiful Sri Lanka,” while contributing to a new global framework for combating transnational crime.

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