News
Ex-CB Governor calls for disciplined fiscal policy, hopeful of agreement with external commercial lenders soon
By Shamindra Ferdinando
Former Central Bank Governor Dr. Indrajith Coomaraswamy has warned that the period ahead required the continued commitment to disciplined fiscal policy, a data dependent and forward-looking monetary policy, as well as a flexible exchange rate procedure.
Dr. Coomaraswamy stressed that the above mentioned strategy should be strongly backed by a laser-like focus on constructing an outward-looking competitive economy that drives sustained growth and higher value employment generation, primarily through export transformation.
The former head of the Monetary Board said so when The Island asked him what the government should do (whoever is in power) to bring the debt restructuring to a successful conclusion. Dr. Coomaraswamy appreciated the simultaneous finalization of Memorandum of Understanding (MoU) between the government and Sri Lanka’s Official Creditor Committee (OCC) and another MoU with China’s Exim Bank on Wednesday.
The Presidential election is scheduled for Sept/Oct this year.
Dr. Coomaraswamy, who had served the Central Bank for 15 years, was invited to rejoin as Governor in July 2016 in the wake of the Treasury bond scams that were perpetrated in Feb 2015 and March 2016. Having succeeded Singaporean Arjuna Mahendran, who had been implicated in the Treasury bond scams, Dr. Coomaraswamy was replaced soon after Gotabaya Rajapaksa’s election as the President in Nov 2019.
Dr. Coomaraswamy said that those who represented Sri Lanka had done extremely well to secure the IMF Executive Board approval for the EFF (Extended Fund Facility) second review. “Performance has exceeded targets on a number of key macroeconomic indicators. On debt restructuring, they have completed the DDR (Domestic Debt Restructuring) some months ago and have done very well to sign agreements with the OCC and Exim Bank China,” Dr. Coomaraswamy said.
Having said so, Dr. Coomaraswamy pointed out the pivotal importance of finalizing an agreement on, what he called, a comparable basis with the commercial external creditors, particularly the ISB holders and the China Development Bank (CDB). The former outspoken official underscored the need to bring negotiations between commercial external creditors to a successful conclusion as soon as possible.
Dr. Coomaraswamy said: “The IMF Executive Directors would not have approved the payment of the third tranche unless they were confident that the negotiations were progressing well in good faith. One can, therefore, be hopeful that these negotiations will be completed soon with the terms of restructuring being aligned with Sri Lanka achieving debt sustainability. This would constitute a major landmark in stabilizing the Sri Lankan economy. Completing the debt restructuring is a sine qua non for creating a platform that creates the space for achieving sustained recovery.
The period ahead requires the continued commitment to disciplined fiscal policy, a data dependent and forward-looking monetary policy and a flexible exchange rate policy. This needs to be complemented by a laser-like focus on constructing an outward-looking competitive economy that drives sustained growth and higher value employment generation, primarily through export transformation.”
So, we could be quite hopeful that these negotiations would be completed soon with the terms of the restructuring being aligned with Sri Lanka achieving debt sustainability. Asked to explain, Dr. Coomaraswamy said that he was very confident that the anticipated deal with the private creditors could be reached quickly though at this point it is too early to tell whether debt sustainability can be achieved with just one restructuring.
Dr. Coomaraswamy said: “This is crucial to address the sharp reversals that have taken place in poverty and multidimensional vulnerability.”
The Island
also sought Dr. Coomaraswamy’s opinion on anti-corruption measures. Asked how anti-corruption measures fit into our overall strategy, the former Governor said that at a minimum the government must implement the time-bound programme it has agreed with the IMF to give effect to the 15 recommendations of its Governance Diagnostic. Dr. Coomaraswamy emphasized that this should apply for any government that took office.
Top Opposition spokesman Prof. G. L. Peiris, MP, recently pointed out that the external debt had increased to USD 100 bn from USD 82 bn since July 2022 therefore efforts on the part of the government to portray a much better or improved performance under Ranil Wickremesinghe’s watch is nothing but propaganda. The former External Affairs Minister said that the borrowings from commercial external creditors were included in the USD 100 bn debt.
Latest News
Commander of the Navy pays courtesy call on Speaker of the Parliament
The Commander of the Navy, Vice Admiral Damian Fernando paid a courtesy call on the Speaker of the Parliament, Dr Jagath Wickramaratne at the Office of the Speaker, today (7 July
2026).
The meeting marked the Commander of the Navy’s first official interaction with the Speaker following his assumption of command of the Sri Lanka Navy. During the cordial discussion, they exchanged views on the Navy’s role in matters of national importance.
The formal meeting drew to a close with an exchange of mementoes, signifying the importance of the occasion.
News
Prison mayhem leaves at least 26 dead; five officers killed in revenge violence
At least 26 people, including five prison officers and 20 inmates, have been confirmed dead following violent unrest at Negombo Prison, hospital sources said yesterday, as authorities struggled to restore full control over the facility.
According to unconfirmed reports the prison officers were killed by rioters yesterday morning, in retaliation, and weapons carried by those officers were grabbed by them.
Negombo General Hospital Director Consultant Dr. Pushpa Gamlath said nearly 100 injured persons had been admitted, following the clashes, and eight of the critically wounded had been transferred to the National Hospital, in Colombo, for further treatment.
The violence, which initially broke out on Sunday (5) between remand prisoners and convicted inmates, left two inmates dead and 38 others injured before being temporarily brought under control.
However, tensions flared again on Monday (6), with prison officials reporting renewed unrest inside the facility despite earlier assurances that the situation had stabilised.
Police said the initial confrontation was triggered by a dispute linked to the exposure of an alleged drug trafficking network, operating within the prison, and was reportedly orchestrated by a drug trafficker, identified as Suresh, who is said to have links to an underworld figure known as ‘Booru Moona’.
The violence rapidly escalated, with female inmates staging a protest on the Prison roof in support of those involved in the clashes, while relatives gathered outside demanding information on detainees. Police later facilitated visits for selected family members to hospitalised inmates.
The Negombo Prison, which houses around 1,800 remand and convicted inmates, descended into widespread disorder as rival groups clashed, with reports indicating that the violence later spread beyond the initial confrontation.
Authorities said rioting inmates had allegedly seized firearms during the renewed unrest on Monday, prompting heightened security measures.
The Sri Lanka Air Force deployed drones for aerial surveillance and a Bell 412 helicopter to monitor the situation, while additional military personnel were sent to reinforce security around the prison.
Prisons Department spokesperson A.C. Gajanayake said a special investigation team had been appointed, under the direction of the Commissioner General of Prisons, to probe the incident, while a separate police investigation is also underway.
Justice Minister Harshana Nanayakkara told The Island that he had called for a detailed report on the disturbances.
By Norman Palihawadane
News
Cleaner, cheaper electricity gathers momentum with rapid progress in 50 MW Mannar wind power project
Sri Lanka’s drive towards cleaner and cheaper electricity gathered fresh momentum with the reported rapid progress in the 50 MW Mannar Wind Power Project, which is expected to produce the lowest-cost wind-generated electricity in the country’s history while saving billions of rupees in annual fuel imports.
The Ministry of Energy announced that the first wind turbine for the project had already arrived in the country, while the remaining turbine components have reached the Port of Trincomalee and are currently being unloaded, signalling a major milestone in the construction of one of the country’s key renewable energy ventures.
The project, inaugurated by President Anura Kumara Dissanayake, in January this year, is expected to become a cornerstone of the government’s strategy to transform Sri Lanka’s electricity sector by expanding renewable energy generation and reducing dependence on imported fossil fuels.
According to the Ministry, electricity generated by the Mannar wind farm will be purchased at USD 0.0465 (approximately Rs. 14.37) per unit, making it the lowest tariff ever secured for wind-generated electricity in Sri Lanka.
Energy experts say the competitive tariff demonstrates the growing economic viability of renewable energy and could help stabilise future electricity prices.
The Ministry also estimates that once the wind farm is connected to the national grid, Sri Lanka will save approximately Rs. 4.7 billion annually by reducing the import of fossil fuels required for thermal power generation, easing pressure on the country’s foreign exchange reserves.
The Mannar project is expected to support the government’s ambition of substantially increasing the contribution of renewable energy to the national electricity mix, by 2030, while helping Sri Lanka move towards its long-term goal of achieving net-zero carbon emissions by 2050.
Hayleys Fentons PLC, selected through an international competitive bidding process, is responsible for the installation and maintenance of the wind turbines.
The National System Operator (NSO), operating under the Ministry of Energy, will oversee the integration and management of electricity generated by the project within the national grid.
By Ifham Nizam
-
News3 days agoSingapore-based Buddhist monk marks nearly four decades of humanitarian service
-
News4 days agoFreedom 250: US Embassy celebrates America’s 250th Independence Day through magic of American cinema
-
News5 days agoCIABOC to question Harak Kata on Rs. 200 mn bribery allegation
-
News5 days agoSLAF conducts successful rescue mission under UN command in Central African Republic
-
Midweek Review7 days agoH’tota port’s strategic status remains focal point of geopolitical scrutiny
-
News2 days agoAI concerned over proposed SL military deployment in Haiti
-
News4 days agoUNEP support pledged to strengthen Sri Lanka’s Environmental Priorities
-
Features3 days agoThe NPP’s New Challenge: Balancing Easter Lawfare and Economic Welfare
