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President makes U-turn on IMF bailout

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Anura Kumara Dissanayake

by Amal JAYASINGHE

Sri Lanka’s new leader on Thursday backed a controversial IMF bailout, marking a U-turn from his election pledge to renegotiate the deal secured by his predecessor.

Leftist President Anura Kumara Dissanayake, who tightened his grip on power last week after winning a huge majority in the legislature following his own victory in September, vowed to maintain the IMF programme.

Sri Lanka went to the IMF for a rescue package after the country defaulted on its $46 billion external debt in April 2022 during an unprecedented economic meltdown.

The shortage of foreign exchange that left the country unable to finance even the most essential imports of food and fuel led to months of street protests and forced then-president Gotabaya Rajapaksa to resign.

The $2.9 billion loan secured early last year required Colombo to sharply raise taxes, remove generous energy subsidies and agree to restructure more than 50 loss-making state enterprises.

Dissanayake’s National People’s Power party had said it did not agree with the International Monetary Fund’s debt assessment and would renegotiate the bailout programme.

But in his first address to the new parliament, where his party enjoys a two-thirds majority, Dissanayake said the economic recovery was too fragile to take risks.

“The economy is in such a state that it cannot take the slightest shock… there is no room to make mistakes,” he said as he ruled out negotiations with either the IMF or creditors.

“This is not the time to discuss if the terms are good or bad, if the agreement is favourable to us or not… The process had taken about two years and we cannot start all over again,” he said.

The delayed third review of the four-year loan programme could be concluded by this weekend, with the finance ministry holding talks with a visiting IMF delegation in Colombo, he added.

Sri Lanka expects the next tranche of about $330 million following an early approval from the board of the international lender of last resort.

Dissanayake’s interim cabinet last month signed off on a controversial restructuring of $14.7 billion in foreign commercial credit tentatively agreed by predecessor Ranil Wickremesinghe.

The debt restructuring is a key IMF demand to rebuild the island’s economy, which suffered its worst crisis in 2022 when it shrank 7.8 percent.

The dissatisfaction with traditional politicians held responsible for the economic collapse was a key driver of Dissanayake’s electoral success.

In June, the government concluded a deal with its bilateral lenders to restructure its official credit amounting to $6 billion, but formal agreements are yet to be signed.

Under the deal announced on September 19, private creditors holding more than half of international sovereign bonds and foreign commercial loans to the South Asian nation agreed to a 27 percent haircut on their loans.

They also agreed to a further 11 percent reduction on the interest owed to them.International sovereign bonds account for $12.5 billion and the balance of $2.2 billion is owed to the China Development Bank.



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Navy seizes an Indian fishing trawler poaching in Sri Lankan waters north of Talaimannar

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During an operation conducted in the wee hours of Tuesday (23 Dec 25), the Sri Lanka Navy seized an Indian fishing trawler  and apprehended 12 Indian fishermen, while they were poaching in Sri Lankan waters north of Talaimannar.

Recognizing the detrimental effects of poaching on marine resources and the livelihoods of local fishing communities, the Sri Lanka Navy continues to conduct regular operations as
proactive measures to deter such activities. These efforts underscore the collective robust approach steadfast commitment to safeguarding the nation’s marine ecosystems while ensuring the economic security and wellbeing of its citizens.

The fishing trawler along with the fishermen held in this operation was handed over to the Fisheries Inspector of Mannar for onward legal proceedings.

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India’s External Affairs Minister meets Sri Lanka PM

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India’s External Affairs Minister, Dr. Subramaniam Jaishankar, met with the Prime Minister of Sri Lanka, Dr. Harini Amarasuriya, on 23 December at Temple Trees, during his visit to Sri Lanka as the Special Envoy of Indian Prime Minister Shri Narendra Modi.

The meeting took place as part of the official visit aimed at holding discussions with Sri Lanka’s top leadership, at a time when the nation commenced reconstruction efforts following the devastation caused by Cyclone Ditwah.

During the discussions, the Minister of External Affairs of India reaffirmed readiness to extend support for Sri Lanka, including assistance in rebuilding railways, bridges, and strengthening of the agricultural sector in the country. He also highlighted the importance of having effective systems in place to respond to disaster situations, supported by strong legislative, administrative, and institutional frameworks. Both sides reviewed ongoing relief efforts and explored avenues to further strengthen bilateral cooperation in disaster response and recovery.

The Prime Minister commended the Government of India for the continued support, noting that the recovery process following the devastation caused by Cyclone Ditwah include beyond immediate relief efforts to long-term measures such as resettlement, and reconstruction of habilitation and infrastructure.

The Prime Minister further stated that steps have been taken to reopen schools as part of the process of restoring normalcy, with close monitoring in place. The Prime Minister emphasized the need to ensure stability, reduce vulnerability, and strengthen protection mechanisms highlighting the solidarity of the people, their strong spirit of volunteerism, and collective action demonstrated during the emergency situation.

The event was attended by the High Commissioner of India Santosh Jha, Additional Secretary (IOR), MEA  Puneet Agrawal, Joint Secretary (EAMO), MEA  Sandeep Kumar Bayyapu, Deputy High Commissioner Dr. Satyanjal Pandey, and representing Sri Lankan delegation, Secretary to the Prime Minister  Pradeep Saputhanthri, Additional Secretary to the Prime minister Ms.Sagarika Bogahawatta, Director General (South Asia), Ministry of Foreign Affairs Samantha Pathirana, Deputy Director, South Asia Division, Ministry of Foreign Affairs Ms.Diana Perera.

[Prime minister’s media division]

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Sri Lanka’s coastline faces unfolding catastrophe: Expert

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Sri Lanka is standing on the edge of a coastal catastrophe, with the nation’s lifeline rapidly eroding under the combined assault of climate change, reckless development and weak compliance, Director General of the Department of Coast Conservation and Coastal Resource Management (DCC&CRM) Dr. Terney Pradeep Kumara has warned.

“This is no longer an environmental warning we can afford to ignore. The crisis is already unfolding before our eyes,” Dr. Kumara told The Island, cautioning that the degradation of Sri Lanka’s 1,620-kilometre coastline has reached a point where delayed action could trigger irreversible damage to ecosystems, livelihoods and national security.

He said accelerating coastal erosion, rising sea levels, saltwater intrusion and the collapse of natural barriers, such as coral reefs and mangroves, are placing entire coastal communities at risk. “When mangroves disappear and reefs are destroyed, villages lose their first line of defence. What follows are floods, loss of homes, declining fisheries and forced displacement,” he said.

Dr. Kumara stressed that the coastline is not merely a development frontier but the backbone of Sri Lanka’s economy and cultural identity. “More than half of our tourism assets, fisheries and key infrastructure are concentrated along the coast.

If the coast fails, the economy will feel the shock immediately,” he warned.

Condemning unregulated construction, illegal sand mining and environmentally blind infrastructure projects, he said short-term economic interests are pushing the coastline towards collapse. “We cannot keep fixing one eroding beach while creating three new erosion sites elsewhere. That is not management—it is destruction,” he said, calling for science-driven, ecosystem-based solutions instead of politically convenient quick fixes.

The Director General said the Department is intensifying enforcement and shifting towards integrated coastal zone management, but warned that laws alone will not save the coast. “This is a shared responsibility. Policymakers, developers, local authorities and the public must understand that every illegal structure, every destroyed mangrove, weakens the island’s natural shield,” he added.

With climate change intensifying storms and sea surges, Dr. Kumara warned that Sri Lanka’s vulnerability will only worsen without urgent, coordinated national action. “The sea has shaped this nation’s history and protected it for centuries. If we fail to protect the coast today, we will be remembered as the generation that allowed the island itself to be slowly eaten away,” he went on to say.

By Ifham Nizam

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