• IMF staff and the Sri Lankan authorities have reached staff-level agreement on economic policies to conclude the third review of Sri Lanka’s economic reform program supported by the IMF’s Extended Fund Facility (EFF). Once the review is approved by IMF Management and completed by the IMF Executive Board, Sri Lanka will have access to about US$333 million in financing.
• The new government’s commitment to the program objectives has enhanced confidence and ensures policy continuity. Sustaining the reform momentum is critical to safeguarding the hard-won gains under the program thus far and putting the economy on a path towards durable recovery and stable and inclusive growth.
• The IMF’s Executive Board will consider completion of the review based on (i) the implementation by the authorities of prior actions; and (ii) the completion of financing assurances review, confirming multilateral partners’ financing contributions and assessing adequate progress with debt restructuring.

Colombo, Sri Lanka – November 23, 2024:

“We are pleased to announce that the IMF team reached staff-level agreement with the Sri Lankan authorities on the third review under the 4-year Extended Fund Facility [EFF] arrangement.  The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

“The staff-level agreement is subject to the approval by IMF management and the IMF Executive Board, contingent on: (i) the implementation by the authorities of prior actions including the submission of a 2025 budget consistent with program objectives; and (ii) the completion of financing assurances review, which will focus on confirming multilateral partners’ committed financing contributions and whether adequate progress has been made with the debt restructuring to give confidence that the restructuring will be concluded in a timely manner and in line with the program’s debt targets.

“Upon completion of the Executive Board review, Sri Lanka would have access to SDR 254 million (about US$333 million), bringing the total IMF financial support disbursed under the arrangement to SDR 1,016 million (about US$1,333 million).

“Sri Lanka’s ambitious reform agenda supported by the EFF is delivering commendable outcomes. The economy expanded on average by 4 percent y-o-y in the four quarters ending in June 2024. High-frequency indicators point to continued expansion across all sectors. Average headline and core inflation remained contained at 0.8 and 3.8 percent during the third quarter. Gross official reserves increased to US$6.4 billion at end-October 2024 with sizeable foreign exchange purchases by the Central Bank. Public finances have strengthened following substantial fiscal reforms.

“Program performance was strong, with all quantitative performance criteria and indicative targets (IT) for end-June 2024 met, as well as the ITs for end-September 2024, except for the IT on social spending. Most structural benchmarks due before October-2024 were either met or implemented with delay; some benchmarks are delayed because of the election cycle.

“The new government’s commitment to the program objectives has enhanced confidence and ensures policy continuity. Sustaining the reform momentum is critical to safeguarding the hard-won gains of the program and putting the economy on a path towards lasting recovery and stable and inclusive growth. Since the crisis has affected Sri Lanka’s entire population, it will be important to ensure that the benefits from economic growth are shared appropriately.

“Maintaining macroeconomic stability and restoring debt sustainability are key to securing Sri Lanka’s prosperity and require persevering with responsible fiscal policy. Continued revenue mobilization efforts and spending restraint are needed to prepare the 2025 budget in line with program parameters. Revenue administration reforms and efforts to improve tax compliance will help to ensure that the burden stemming from the crisis is shared proportionately to taxpayers’ ability to contribute. Avoiding new tax exemptions will help reduce fiscal revenue leakages, corruption risks and build much needed fiscal buffers, including for social spending and to support Sri Lanka’s most vulnerable. Maintaining cost recovery in fuel and electricity pricing and resolving legacy debts will help minimize fiscal risks arising from state-owned enterprises.

“The government has an important responsibility to protect the poor and vulnerable at this difficult time. It is important to redouble efforts to meet the program’s minimum spending target on social spending and to improve targeting, adequacy, and coverage of social safety nets, particularly Aswesuma.

“While inflation has decelerated faster than expected, continued monitoring is warranted to ensure sustained price stability and support macroeconomic stability. Against ongoing global uncertainty, it remains important to continue rebuilding external buffers through strong reserves accumulation.

“Sri Lanka’s recent Agreement in Principle with bondholders is an important milestone putting Sri Lanka’s debt on a path towards sustainability. The critical next steps are to complete the commercial debt restructuring, finalize bilateral agreements with official creditors along the lines of the accord with the Official Creditor Committee and implement the terms of the other agreements. This will help restore Sri Lanka’s debt sustainability.

“The new government’s mandate will reinvigorate governance reforms addressing corruption risks, rebuilding economic confidence, and making growth more robust and inclusive.

“The IMF team held meetings with His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Labor Minister and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, Honorable Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma, Senior Economic Advisor Duminda Hulangamuwa, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Mr. K M Mahinda Siriwardana, and other senior government and CBSL officials. The team also met with Parliamentarians, representatives from the private sector, civil society organizations, and development partners.

“We would like to thank the authorities for the excellent collaboration.”

Dr. Madura Seneviratne, the newly appointed Deputy Minister of Education and Higher Education, officially commenced his duties on Friday (22nd) at the Ministry of Higher Education in the presence of Prime Minister Dr. Harini Amarasuriya.

The ceremony was attended by Deputy Minister of Vocational Education Nalin Hewage, Secretary to the Prime Minister Pradeep Saputhanthri, Secretary to the Ministry of Education, Higher Education, and Vocational Education Nalaka Kaluwewa, along with ministry officials and heads of affiliated institutions.

[Prime Minister’s Media Division]

President Anura Kumara Dissanayake called upon all public officials to unite with a common purpose and work together to transform the motherland into a better nation.

He made this statement on Friday (22) during his visit to the Ministry of Defence at the Defence Headquarters premises in Akuregoda, where he assumed duties as the new Defence Minister.

Upon his arrival, the President was warmly welcomed by the staff of the Ministry of Defence.

Following the reception, the President held a meeting with the commanders of the tri-forces and senior officials of the Ministry of Defence, where they discussed ongoing and future initiatives of the Ministry.

President Dissanayake stated that the new government is dedicated to promoting good governance and seeks the support of everyone for the nation’s development program.

The President highlighted that the power of the people remains just as strong, irrespective of the Constitution and laws. He pointed out that the composition and outcome of the mandate given in the most recent presidential and general elections reflect the people’s expectations. The President also noted that the government received nearly 80% of the public’s support in the election, marking a significant shift that aligns with the people’s desires.

President Anura Kumara Dissanayake affirmed that his government, as a political authority, has no other objective than to provide the political leadership necessary to meet the expectations of the people. He also emphasized that the support of public officials is crucial to making these goals a reality.

The President stressed that in this new transformation that the public is anticipating, progress cannot be made without strengthening public trust in the public service. He noted that it is the public service that has been the driving force behind the economic and social growth of every developed nation.

Deputy Minister of Defence Major General (Retd) Aruna Jayasekara, Secretary to the Ministry of Defence Air Vice Marshal (Retd) Sampath Thuyacontha, Chief of Defence Staff General Shavendra Silva, Commander of the Army Lieutenant General H L V M Liyanage, Commander of the Air Force Air Marshal Udeni Rajapaksa, Commander of the Navy Vice Admiral Priyantha Perera, members of the security forces, and staff from the Ministry of Defence  attended the event.