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SL’s second review: IMF Executive Board to meet on 12 June

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Julie Kozack

The International Monetary Fund (IMF) on Thursday (06) asserted that Sri Lanka could soon reach agreements with external commercial creditors consistent with programme parameters.

“So overall we assess that there has been sufficiently strong progress on the debt restructuring front,” Julie Kozack, Director of the IMF Communications Department, told the media.

On March 21st, the IMF staff and the Sri Lankan authorities reached staff-level agreement on economic policies to conclude the second review of the economic reform programme and also the 2024 Article IV Consultation.

Kozack confirmed that on June 12th, the IMF Executive Board will meet to discuss Sri Lanka’s second review and the Article IV Consultation.

“In Sri Lanka, we do see macroeconomic policy reform starting to bear fruit.” Commendable outcomes include rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while preserving stability of the financial system, she said responding to questions on Sri Lanka.

The IMF spokesperson said that the programme performance is strong with most quantitative and structural conditionality for the second review met or implemented with delay, and reforms are still ongoing in some areas.

“The next steps on the debt restructuring are indeed to conclude negotiations with external commercial creditors and to implement agreements in principle with the official creditors. The domestic debt operations are largely completed. Debt restructuring discussions are continuing.”

More specifically, she said the authorities have been holding extensive discussions with external official creditors regarding an MOU with the official creditor committee and the final agreements with the Export Import Bank of China.

Discussions with external bondholders continue with the aim of reaching agreements in principle soon, Kozack said, adding that negotiations with the China Development Bank are also at an advanced stage.

“There is a strong expectation that agreements with external commercial creditors consistent with programme parameters will be reached soon. So overall we assess that there has been sufficiently strong progress on the debt restructuring front.”



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Sri Lanka, India caught in US-Iran ship crisis

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By Shamindra Ferdinando

Iran has sought the Indian intervention, at the highest level, to provide lifesaving support to the crews of empty Iranian vessels stranded just outside Sri Lanka’s 12-nautical mile territorial waters off Galle.

Sources familiar with the issue said that Iran had brought the developing situation to the attention of New Delhi as the crews of almost 20 vessels, included Indian nationals. Sources stressed that the group of vessels that unloaded crude oil a couple of months back were now stranded within Sri Lanka’s Exclusive Economic Zone (EEZ).

The US Navy torpedoed an unarmed Iran frigate, returning from India, on 04 March, 2026, about 19 nautical miles off the Galle coast. The unprovoked attack killed nearly 100 Iranians.

The Iranian Embassy in Colombo has inquired from the Indian High Commission of their response to the situation, sources said. The US has issued a global warning against providing food, water, medicine and other services to the Iranian vessels. The outcome of Iran-India talks on the issue at hand was not known, though sources asserted India may not throw its weight behind Iranian efforts to address the issue.

Responding to The Island queries, sources said both Sri Lanka and India were in a dilemma due to the US warning. India couldn’t ignore the plight of the Indian crew members and the Iranian vessels in its backyard.

The Sri Lankan government remains tight-lipped about the vessels stranded in its EEZ. Our efforts to elicit a response from relevant authorities were in vain. In addition to Indians, there are Bangladeshis among the crew members. Iran has explicitly stated the responsibilities of the countries concerned to provide assistance in terms of international law.

The Iranian position was articulated by its Ambassador to Sri Lanka, Dr.Alireza Delkhosh, recently. In a special statement, Ambassador Delkhosh emphasised that in terms of the Convention on the Law of the Sea (Article 98) as well as SOLAS and SAR

Conventions, Sri Lanka couldn’t refrain from providing the needs of the Iranian vessels stranded in its EEZ.

SLMC leader Rauff Hakeem lambasted the NPP government in Parliament for failing to provide assistance to the Iranian ships. The former Minister alleged that the government was simply carrying out dictates of the US. He strongly criticised the way Foreign Minister Vijitha Herath was handling the issue.

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Namal further remanded

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MP Namal Rajapaksa being brought to the Colombo Magistrate’s Court yesterday. Pic by Nishan S Priyantha

MP Namal Rajapaksa, who is in remand custody over the controversial Airbus deal, was further remanded until October 27 by the Colombo Magistrate’s Court yesterday (13).

Colombo Chief Magistrate Asanga S. Bodaragama made the order after considering submissions by officers of the Commission to Investigate Allegations of Bribery or Corruption and lawyers representing Rajapaksa.

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IMF projects Lankan economic growth to moderate amidst mounting global uncertainties

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Sri Lanka’s economy is expected to sustain its recovery over the next two years, although growth is projected to moderate amid mounting global uncertainties, according to the International Monetary Fund’s (IMF) latest World Economic Outlook.

In its World Economic Outlook 2026: Resilience Under Strain, Urgent Choices, the IMF projects Sri Lanka’s economy to expand by 4% in 2026, slowing to 3.7% in 2027, following estimated growth of 5% in 2025.

Inflation, meanwhile, is forecast to rise to 5.3% in 2026 and 5.4% in 2027, reversing the average deflation rate of 0.5% recorded in 2025.

Unemployment is expected to remain steady at 3.9% throughout the forecast period.

The projections come amid growing pressure on the global economy from the ongoing conflict in the Middle East, elevated energy prices, geopolitical tensions and trade disruptions.

Sri Lanka’s external position is also expected to weaken, with the current account balance projected to shift from a surplus of 1.6% of gross domestic product (GDP) in 2025 to deficits of 0.5% in 2026 and 0.3% in 2027.

The IMF’s outlook points to continued economic expansion in Sri Lanka, but with slower growth, rising inflation and a narrowing external surplus giving way to current account deficits over the forecast period.

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