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IMF deal clears path for $700M boost to Lanka’s recovery

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Sri Lanka and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies to conclude the combined Fifth and Sixth Reviews of Sri Lanka’s reform program supported by the IMF’s Extended Fund Facility.

Once the review is approved by the IMF Executive Board, Sri Lanka will have access to about US$700 million in financing, the IMF said yesterday in a statement.

Full text of the IMF statement: An International Monetary Fund (IMF) mission team led by Evan Papageorgiou visited Sri Lanka from March 26 to April 9, 2026, to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the Extended Fund Facility (EFF) arrangement. At the end of the mission, Mr. Papageorgiou issued the following statement:

“IMF staff and the Sri Lankan authorities have reached staff-level agreement on the combined Fifth and Sixth Reviews 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 IMF Executive Board approval, contingent on: (i) the restoration of cost-recovery electricity and fuel pricing while protecting the vulnerable and (ii) the completion of the financing assurances review, to confirm multilateral partners’ financing contributions and assess adequate progress with debt restructuring.

“Upon completion of the Executive Board review, Sri Lanka would have access to SDR 508 million (about US$700 million), bringing the total IMF financial support disbursed under this arrangement to SDR 1,778 million (about US$2.4 billion).

“Sri Lanka’s ambitious reform agenda continues to deliver commendable outcomes. The economy grew by 5 percent y/y in 2025. Inflation has returned to positive territory and rebounded to 2.2 percent y/y in March, and gross official reserves reached US$7 billion in end-March 2026. Fiscal performance in 2025 was strong, primarily supported by taxes on motor vehicle imports. Debt restructuring is nearing completion, with the successful completion of Sri Lankan Airlines’ debt exchange and further progress in finalising remaining bilateral agreements.

“Sri Lanka is significantly exposed to the Middle East conflict, which has heightened energy prices, disrupted a key air hub for tourists, and affected Sri Lankans working in the region. Authorities have ameliorated disruptions to economic activity by securing sufficient fuel supplies for households and industries. At the same time, the country needs to address the infrastructure and spending needs caused by Cyclone Ditwah. Heightened downside risks to the economy from disaster risks,persistent trade policy uncertainty and the conflict in the Middle East emphasize the urgency to accelerate the reform momentum to safeguard macroeconomic stability, enhance Sri Lanka’s resilience to shocks, and maintain the economy on a path toward recovery and inclusive growth.

“On this front, it is important to continue building fiscal space through strong revenue measures and prudent spending execution. This requires sustained efforts to improve tax compliance, broaden the tax base, address revenue leakages, and enhance public financial management. It is instrumental to restore and maintain cost-recovery fuel and electricity pricing while assisting the most vulnerable. Continued vigilance is needed to minimize fiscal risks and safeguard fiscal discipline.

“As Sri Lanka starts building back better, projects should be prioritized judiciously and spending executed transparently and in compliance with the Public Financial Management Act. Any fiscal support in response to exogenous shocks should be well-targeted, carefully costed, and timebound. Protecting the poor and vulnerable, who are disproportionately affected, should remain a priority, and this calls for the steadfast strengthening of social safety nets by improving their targeting, adequacy, coverage, and shock-responsiveness.

“It is important for monetary policy to remain data-dependent and agile to safeguard price stability in the face of shocks. Central bank independence should continue to be upheld, including by continuing to prohibit monetary financing of the budget. Rebuilding foreign reserves while allowing for exchange rate flexibility is a necessity amid global uncertainty. Resolving non-performing loans, promoting sound credit growth, and addressing vulnerabilities in some small licensed finance companies will help safeguard financial stability.

“The publication of the 2026 government action plan on governance reforms is welcome; effective implementation will help advance the anti-corruption agenda and support growth. It will be key to uphold the independence of Sri Lanka’s anti-corruption body (CIABOC), support the reliability of the beneficial ownership registry, and strengthen fiscal governance through sound legislation on public-private partnerships, state-owned enterprises, public procurement, and public asset management. Unlocking strong and durable growth for all Sri Lankans requires staying the course on reforms, including by sustaining trade liberalization efforts, accelerating digitalization initiatives, streamlining business regulations, and modernizing labor legislation to reduce rigidities.

“The IMF team held meetings with President and Finance Minister Anura Kumara Dissanayake, Labor Minister and Deputy Minister of Finance and Planning Prof. Anil Jayantha Fernando, Deputy Minister of Economic Development Nishantha Jayaweera, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Dr. Harshana Suriyapperuma, Senior Economic Advisor to the President  Duminda Hulangamuwa, Chief Advisor to the President on Digital Economy Dr. Hans Wijayasuriya, Governor of Southern Province Prof. Susiripala Manawadu, and other senior government and CBSL officials. The IMF 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 during the mission, including during our visit to Galle in the Southern Province. We reaffirm our commitment to support Sri Lanka at this uncertain time.”



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Customs asked to resume probe or face legal action

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Rs. 16 bn BMW revenue fraud:

Public interest litigation activist Nagananda Kodituwakku has said he will initiate appropriate proceedings against Director General of Customs, Wimal S.K. Liyanagama, in terms of the Anti-Corruption Act No 9 of 2023, unless the Customs carries out a revenue fraud inquiry to recover approximately Rs 16 bn in lost government revenue.

General Secretary of Vinivida Foundation, and former Customs officer, Kodituwakku said that though the Department, in response to his request for a meeting to discuss the issue, in writing, assured them that the investigation was underway, they found that the actual situation was not so.

Kodituwakku alleged that the Customs Chief had neglected what he called statutory duties under the Customs Ordinance, by disregarding his request for a meeting.

Kodituwakku said the investigation into the importation of 1,728 brand new BMW vehicles, under the concessionary duty permits issued by the government for the public servants, between 2011 and 2014, had been stalled.

The civil society activist said that investigations had revealed the vehicles hadn’t been imported by the permit holders themselves but others. It also transpired that the value of the imported vehicles, mentioned in the commercial invoices, proforma invoices and the CusDecs, tendered to Customs in the names of the permit holders, were not the actual values for the vehicles in question.

The high-profile case has been handled by the Central Investigation Directorate, at that time headed by Murugesu Thayabaran, a batchmate of Kodituwakku.

The ex-Customs officer said that he had appeared as counsel for Thayabaran in Court of Appeal and was determined to bring the case to a successful conclusion. According to him, the importer, over the years, had been represented by nine President’s Counsel as the case dragged on from the time of P.S.M. Charles, Director General, Customs.

Kodituwakku made available letters he wrote to the Customs and other parties on this issue, to The Island. Pointing out that the Court of Appeal on 7 May, 2024, dismissed the importer’s final appeal regarding the case pertaining to the revenue loss of Rs. 16 bn, Kodituwakku said that although the court had cleared the way for the Customs probe, no action had been taken.

However, the Court of Appeal ruling was given before Liyanagama succeeded Seevali Arukgoda as DG Customs on 6 May, 2026. Liyanagama served as Director General of the Department of Management Services at the Treasury before the new appointment.

Kodituwakku said that he had also brought the Customs case to the attention of the Commission to Investigate Bribery or Corruption (CIABOC).

Emphasising the failure on the part of the Opposition to raise this issue, both in and outside Parliament, Kodituwakku said that since the exposure of the BMW scam, during Mahinda Rajapaksa’s presidency, there had been four presidents, namely Maithripala Sirisena, Gotabaya Rajapaksa, Ranil Wickremesinghe and incumbent Anura Kumara Dissanayake. Unfortunately, successive administrations had allowed the interested parties to drag the case. The lack of interest shown by political parties revealed that they not only protected those responsible but encouraged corrupt practices of allowing third parties to import vehicles in terms of permits issued to legitimate recipients of such permits.

Having campaigned on an anti-corruption platform, during the presidential and parliamentary polls in 2024, the NPP couldn’t, under any circumstances, turn a blind eye to this situation, Kodituwakku said, adding that even the IMF should be concerned of the failure on the part of successive governments to recover the money.

By Shamindra Ferdinando

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Outgoing Chinese Ambassador Qi Zhenhong bids farewell to Mahanayake Theras

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The outgoing Ambassador visiting the Maha Nayake Theras

Outgoing Chinese Ambassador to Sri Lanka, Qi Zhenhong, who is scheduled to conclude his tenure on July 31, visited Kandy on the afternoon of July 18 to pay respects and receive blessings from the Mahanayake Theras of the Malwathu and Asgiriya Chapters.

During the visit, the Most Venerable Thibbotuwawe Sri Sumangala Mahanayake Thera of the Malwathu Chapter and the Most Venerable Warakagoda Sri Gnanarathana Mahanayake Thera of the Asgiriya Chapter hailed the Ambassador’s dedicated service to the country.

The Malwathu Mahanayake Thera noted that Ambassador Qi had performed his duties as a diplomat to the highest possible standard. He stated that the Ambassador’s contributions during his nearly six year tenure, including assistance during natural disasters and support for economic, educational, cultural, and religious sectors, would never be forgotten.

Expressing his appreciation, the Mahanayake Thera remarked that he would like the Ambassador to remain in Sri Lanka even after retirement.

The Asgiriya Mahanayake Thera, Most Venerable Warakagoda Sri Gnanarathana Thera, also commended the Ambassador’s efforts in supporting infrastructure development during various natural disasters and praised his initiatives in strengthening the bilateral relations between China and Sri Lanka.

Reflecting on his tenure, Ambassador Qi Zhenhong stated that the Sri Lankan economy is gradually improving under the new government. He noted that the Chinese government fully supports the current government’s focus on industrial policy, state owned enterprise reform, and exports.

The Ambassador highlighted several ongoing collaborative projects, including an agreement to provide school uniforms, the reconstruction of 14 bridges destroyed by cyclones, and the upcoming arrival of the first batch of electric buses and vehicles.

“Sri Lanka feels like my second home,” the Ambassador said, adding that he is grateful for the generous support and sincere friendship extended to him by the people of Sri Lanka. He confirmed that while his tenure ends on July 31, he will continue to engage with Sri Lanka whenever possible.

The Ambassador also visited the Senior Member of the Asgiriya Chapter, Most Venerable Godagama Sri Mangala Thera, to receive further blessings, with other prominent members of the Maha Sangha also in attendance.

By S.K. Samaranayake

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Move to extend retirement age of top judges: BASL asks govt. to stop process pending meaningful consultations

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(From left: Rienzie Arsecularatne, Rajieev Amarasuriya and Pasindu Silva

President of the Bar Association Rajeev Amarasuriya yesterday (21) briefed the media regarding the action taken by them to discourage the NPP government from increasing the retirement age of superior court judges.

Amarasuriya, flanked by BASL Deputy President Rienzie Arsecularatne (right) and Treasurer Pasindu Silva reiterated their strong opposition to the alleged move. The briefing took place at Dr. H.W. Jayawardene QC Auditorium, BASL Secretariat, Mihindu Mawatha.

Pointing out that the move to bring in a constitutional amendment to facilitate the project would be detrimental to the judiciary and the country, the BASL requested an opportunity to meet Justice Minister Harshana Nanayakkara to discuss the issues at hand.

The BASL proposed that the delegation would consist of members of the Executive Committee, President’s Counsel and senior members of the legal fraternity.

Amarasuriya said that the BASL was willing to assist the Justice and National Integration Ministry in a consultative process in case the government decided to do so. “We sincerely hope that no further steps will be taken in relation to this proposal until meaningful consultation has taken place with the principal stakeholders of the justice sector,” Amarasuriya said.

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