Business

SL clinches deal with IMF for 4-year EFF of $ 2.9 billion subject to debt restructuring and prior actions

Published

4 years ago

2022/09/2

By Hiran H.Senewiratne

The International Monetary Fund said it had reached a deal with Sri Lanka for a 4-year 2.9 billion US dollar extended fund facility subject to debt restructuring and prior actions.Under the program the Sri Lankan budget will have to generate a primary surplus (debt before interest) of 2.3 per cent by 2024. The 2022 expected primary deficit is 4 per cent of GDP, the IMF senior mission led by Peter Breuer said.

“These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024, Breuer said at a media conference at the Central Bank head office in Colombo yesterday. Breuer together with Masahiro Nozaki and other members of the IMF delegation visited Sri Lanka from August 24 to September 1 to continue discussions on IMF support for Sri Lanka and the local authorities’ comprehensive economic reform program.

Breuer added: ‘The 2022 primary deficit was projected by the government at -4.0 per cent of GDP. Sri Lanka will also have to negotiate with creditors to restructure debt.

“The agreement is subject to the approval by the IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors.

“Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and to close financing gaps.

“The Central Bank will also have to stop printing money (monetary financing) and bring down inflation.’’

The full IMF statement is reproduced below:

“The Sri Lankan authorities and the IMF team have reached staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 48-month Extended Fund Facility (EFF) with a requested access of about SDR 2.2 billion (equivalent to US$2.9 billion).

“The new EFF arrangement will support Sri Lanka’s program to restore macroeconomic stability and debt sustainability, while safeguarding financial stability, reducing corruption vulnerabilities and unlocking Sri Lanka’s growth potential.

“The agreement is subject to the approval by IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors. Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.

“Sri Lanka has been facing an acute crisis. Vulnerabilities have grown owing to inadequate external buffers and an unsustainable public debt dynamic. The April debt moratorium led to Sri Lanka defaulting on its external obligations, and a critically low level of foreign reserves has hampered the import of essential goods, including fuel, further impeding economic activity. The economy is expected to contract by 8.7 per cent in 2022 and inflation recently exceeded 60 per cent. The impact has been disproportionately borne by the poor and vulnerable.

“Against this backdrop, the authorities’ program, supported by the Fund, would aim to stabilize the economy, protect the livelihoods of the Sri Lankan people, and prepare the ground for economic recovery and promoting sustainable and inclusive growth.

Key elements of the program are:

Raising fiscal revenue to support fiscal consolidation. Starting from one of the lowest revenue levels in the world, the program will implement major tax reforms. These reforms include making personal income tax more progressive and broadening the tax base for corporate income tax and VAT. The program aims to reach a primary surplus of 2.3 per cent of GDP by 2024.

Introducing cost-recovery based pricing for fuel and electricity to minimize fiscal risks arising from state-owned enterprises. The team welcomed the authorities’ already announced substantial revenue measures and energy pricing reforms;

Mitigating the impact of the current crisis on the poor and vulnerable by raising social spending, and improving the coverage and targeting of social safety net programs;

Restoring price stability through data-driven monetary policy action, fiscal consolidation, phasing out monetary financing, and stronger Central Bank autonomy that allow pursuing a flexible inflation targeting regime. A new Central Bank Act is a cornerstone of this strategy;

Rebuilding foreign reserves through restoring a market-determined and flexible exchange rate, supported by the comprehensive policy package under the program;

Safeguarding financial stability by ensuring a healthy and adequately capitalized banking system, and by upgrading financial sector safety nets and regulatory standards with a revised Banking Act; and Reducing corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, and conducting an in-depth governance diagnostic, supported by IMF technical assistance.

The IMF team held meetings with President and Finance Minister Ranil Wickremesinghe, Prime Minister Dinesh Gunawardena, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury K M Mahinda Siriwardana, and other senior government and CBSL officials. It also met with parliamentarians, representatives from the private sector, civil society organizations and development partners.

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Business

USD 57.4m power investment opens new route for SME energy savings

Published

22 hours ago

2026/10/9

Thilina Walpola

A rooftop solar panel in Sri Lanka

By Ifham Nizam

A USD 57.4 million investment package is set to reshape the economics of electricity for small and medium-sized businesses, while creating a stronger platform for private investment in rooftop solar and other distributed renewable-energy projects.

The financing package—comprising a USD 35 million concessional loan from the Asian Development Bank (ADB), a EUR 15.4 million grant from the European Union (EU), equivalent to USD 16.94 million, and a USD 5.5 million grant from the Japan Fund for the Joint Crediting Mechanism (JFJCM)—will finance a five-year programme to modernise the electricity distribution system from 2026 to 2030.

For the business community, one of the most significant elements is the planned introduction of Virtual Net Metering (VNM), which will be implemented in the country for the first time.

The EU-funded component will support 25 MW of aggregated rooftop solar PV capacity, specifically aimed at helping reduce the electricity-bill burden of small and medium-scale entrepreneurs.

The move could open a new investment channel for SMEs that have traditionally faced difficulties in absorbing high energy costs and making the upfront investment required for renewable-energy systems.

Rather than viewing rooftop solar simply as a household energy solution, the programme positions distributed solar as an important business-cost management tool.

For SMEs, which operate with considerably tighter margins than many large corporates, electricity expenditure can have a direct impact on competitiveness, cash flow and the ability to expand operations.

By allowing electricity generated from qualifying rooftop solar installations to be applied through a virtual net-metering arrangement, the programme is expected to broaden the economic benefits of solar power beyond individual premises.

The financial significance of the scheme extends beyond the initial 25 MW.

By establishing the infrastructure and regulatory framework required to manage aggregated distributed generation, the project could help create greater investor confidence in the development of decentralised renewable-energy assets.

The investment therefore has the potential to leverage additional private capital into the renewable-energy sector rather than functioning solely as a government-funded infrastructure programme.

The financing package is particularly notable because a substantial portion comes in the form of grants and concessional funding, reducing the cost of financing technologies that would otherwise require significant upfront capital.

The ADB loan will support the wider modernisation programme, while the EU and Japanese grant components will help finance renewable-energy integration and technologies designed to strengthen the grid.

At EDL, the investment will upgrade the existing CEBAssist platform with Advanced Metering Infrastructure (AMI), a Distributed Energy Resource Management (DERM) system and distribution control centres supported by an Advanced Distribution Management System (ADMS).

These systems will give the utility real-time visibility of electricity consumption and distributed generation, allowing it to manage an increasingly decentralised power system more efficiently.

That digital infrastructure is critical to the business case for expanding rooftop solar.

As more SMEs and other consumers generate their own electricity, the distribution network needs to know where generation is taking place, how much electricity is entering the grid and how those flows are affecting local network conditions.

Business

Renault Experience Centre opens at Majestic City

Published

23 hours ago

2026/10/9

Thilina Walpola

Renault has taken another significant step in its return to the Sri Lankan market with the opening of the Renault Experience Centre at Majestic City, Colombo, offering customers an opportunity to discover the brand and experience its latest models.

The Centre was officially declared open by Jawahar Ganesh, Group Managing Director of Associated Motorways (Private) Limited, accompanied by Prasanna de Silva, Director – Sales, AMW. The occasion was attended by AMW management and staff, members of the media, customers, well-wishers and other invited guests.

Located at the lobby of Majestic City, the Centre features three Renault models being introduced to the Sri Lankan market – the Renault Kwid, Renault Kiger and Renault Triber. Visitors can explore the vehicles, learn about their features and specifications, and take advantage of test drives available at the location.

Adding to the convenience for customers, AMW has ample stocks of Renault vehicles available in Sri Lanka, allowing customers to take delivery of their chosen vehicle without having to wait for months for it to arrive. Subject to completion of the necessary documentation and registration, customers can look forward to driving away in their new Renault within as little as one day, making the purchase experience faster and more convenient.

Customers can also enjoy greater peace of mind with a three-year manufacturer warranty, supported by dedicated Renault aftersales facilities to provide professional service and support throughout their ownership journey.

Commenting on the opening, Jawahar Ganesh, Group Managing Director of AMW, said, “We are delighted to welcome Renault back to Sri Lanka and to open the Renault Experience Centre at Majestic City. Renault is a brand with an exceptional heritage, a strong global presence and a reputation for innovation and distinctive automotive design. Through AMW, we are bringing that heritage and experience closer to Sri Lankan customers”.

Business

Dialog and Indira Cancer Trust continue breast cancer awareness initiative through Yeheli.lk

Published

23 hours ago

2026/10/9

Thilina Walpola

From left to right: Dr. Sanjeeva Gunasekera, President of the Sri Lanka College of Oncologists (SLCO), and Supun Weerasinghe, Director / Group Chief Executive of Dialog Axiata PLC, illuminate the Dialog Corporate Head Office in pink, joined by Dr. Lanka Jayasuriya Dissanayake, Chairperson of the Indira Cancer Trust, alongside representatives of the Indira Cancer Trust and the leadership of Dialog Axiata PLC, in support of Breast Cancer Awareness Month.

Dialog Axiata PLC, Sri Lanka’s #1 connectivity provider, marked the beginning of Breast Cancer Awareness Month by illuminating its Corporate Head Office in pink, in partnership with the Indira Cancer Trust, to stand in solidarity with individuals and families affected by breast cancer and encourage greater awareness, regular screening and early detection.

Building on previous breast cancer awareness campaigns conducted through Dialog’s Yeheli.lk platform in collaboration with the Indira Cancer Trust, this year’s initiative will continue throughout October under the theme, ‘A Pledge from the Heart’. As part of the campaign, members of the public can visit yeheli.lk to register for a free monthly SMS reminder and take their pledge for early detection throughout Breast Cancer Awareness Month.