Business

IMF reviews progress as Sri Lanka stresses economic resilience amid external pressures

Published

6 months ago

2026/04/3

IMF reviews progress as Sri Lanka stresses economic resilience amid external pressures

Sri Lanka has made steady progress under the International Monetary Fund Extended Fund Facility (EFF) programme, with the fifth and sixth reviews now under close assessment, informed officials said following high-level discussions held at the Presidential Secretariat yesterday.

A visiting delegation led by IMF Mission Chief for Sri Lanka Evan Papageorgiou met President Anura Kumara Dissanayake and senior government leaders to evaluate the country’s performance against key reform benchmarks, including fiscal consolidation, revenue mobilisation and external sector stability.

“Informed officials indicated that Sri Lanka has demonstrated notable resilience despite a challenging global environment,” sources familiar with the discussions told The Island Financial Review. “There has been measurable progress in stabilising macroeconomic conditions, particularly in terms of rebuilding foreign reserves and strengthening public finance management.”

The talks focused extensively on maintaining the current reform momentum, with both sides acknowledging that policy consistency would be critical to sustaining recent gains.

“Officials emphasised that the economy is now in a more shock-resilient position compared to the height of the crisis,” a senior source said. “However, they also cautioned that this stability remains fragile and requires continued fiscal discipline and structural reforms.”

Particular attention was paid to Sri Lanka’s revenue performance, which has been a cornerstone of the IMF-supported programme.

“The improvement in revenue collection has been a key positive,” an official noted. “It reflects both policy measures and better administration, but sustaining this trajectory will be essential to meeting programme targets.”

The discussions also addressed the buildup of foreign reserves, a critical buffer against external vulnerabilities.

“Rebuilding reserves has strengthened confidence,” another official said. “It provides a degree of insulation against global shocks, although the country is not yet fully out of risk territory.”

Officials acknowledged that emerging geopolitical tensions—particularly the ongoing instability in the Middle East—pose a fresh external challenge.

“The impact from the Middle East situation is unavoidable,” a source said. “Higher energy prices and supply uncertainties are already exerting pressure, and these factors could affect inflation and the balance of payments.”

In response, the government has prioritised targeted relief measures to cushion vulnerable groups from rising costs, particularly in relation to fuel and energy.

“There is a clear focus on ensuring that any shocks are managed without derailing the broader reform programme,” an official explained. “Targeted support, rather than broad subsidies, remains the preferred approach.”

Energy security and pricing were also

key areas of discussion, given their direct impact on both fiscal stability and household welfare.

“Maintaining cost-reflective pricing while protecting the most vulnerable is a delicate balance,” a senior official said. “But it is essential for the sustainability of the sector.”

The IMF team is expected to continue its assessment in the coming days, with outcomes of the fifth and sixth reviews likely to play a crucial role in determining the next phase of disbursements under the programme.

“Informed officials stressed that successful completion of these reviews would send a strong signal to international markets and development partners,” sources said.

They added that Sri Lanka’s reform trajectory has already contributed to improved investor sentiment, although sustained confidence will depend on consistent policy implementation.

“The message from both sides is clear—stay the course,” an official said. “The foundations for recovery are being laid, but the process is far from complete.”

By Ifham Nizam

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Business

ADB approves $100 million loan to boost skills development and jobs for youth in Sri Lanka

Published

17 hours ago

2026/10/2

Thilina Walpola

The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka transform its technical and vocational education and training (TVET) system, equip more young people with industry-relevant skills, and strengthen the country’s competitiveness and inclusive growth.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts in improving the quality and relevance of skills training, strengthening links between training providers and industries, and expanding employment opportunities for youth. The program will increase women’s employment opportunities in nontraditional jobs in fields including automotive technology, engineering, information and communications technology, construction, and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

Though Sri Lanka’s economy is recovering, it faces skills shortages in priority sectors, high youth unemployment, and low female labor force participation. Many employers report difficulty finding workers with the skills needed in a changing economy.

Aligned with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035, the nationwide program will be implemented from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

Business

USD 40.84m pipeline to secure aviation fuel supplies to BIA

Published

17 hours ago

2026/10/2

Thilina Walpola

By Ifham Nizam

The government has cleared a USD 40.84 million and Rs. 8,548.75 million contract to build a dedicated aviation fuel pipeline from Muthurajawela to Bandaranaike International Airport (BIA), alongside a massive new fuel storage facility with a capacity of 92,000 cubic metres.

Energy Minister Anura Karunatilaka said the project represented a major investment in strengthening the infrastructure underpinning Sri Lanka’s aviation fuel supply and ensuring more reliable fuel availability at the country’s main international airport.

‘This project will provide the infrastructure required to strengthen the reliability and continuity of aviation fuel supplies to Bandaranaike International Airport, Karunatilaka said.

The contract has been awarded to China Petroleum Pipeline Engineering Company Limited, following an international competitive procurement process in which three bids were received.

The project will see a new aviation fuel storage tank complex constructed at Muthurajawela, together with the associated infrastructure required for handling and transferring aviation fuel.

Business

CSE activity up, turnover weak at Rs. 1.4 billion

Published

17 hours ago

2026/10/2

Thilina Walpola

By Hiran H Senewiratne

Trading activity on the Colombo Stock Exchange (CSE) gathered pace yesterday as global fuel prices began to show signs of easing, according to market analysts.In this context, both indices moved upwards. All Share Price Index up by 67.97 points while S and P SL20 up by 8.30 points.

Turnover stood at Rs 1.4 billion with seven crossings. Those crossings were reported in Sampath Bank 1.7 million shares crossed to the tune of Rs 238 million and its share price traded at Rs 140, Access Engineering two million shares crossed to the tune of Rs 159 million and its share price traded at Rs 79.50, LOLC one million shares crossed to the tune of Rs 129 million and its share price traded at Rs 129, HNB 100,000 shares crossed to the tune of Rs 38.4 million and its share price traded at Rs 384, JKH 1.9 million shares crossed to the tune of Rs 35 million and its share price traded at Rs 18.60, Hayleys 100,000 shares crossed to the tune of Rs 22.50 million and its share price traded at Rs 225 and Richard Pieris 847,000 shares crossed to the tune of Rs 22 million and its share price traded at Rs 25.50.

In the retail market top seven companies that have mainly contributed to the turnover were Sampath Bank Rs 114 million (813,000 shares traded), JKH Rs 100 million (5.3 million shares traded) LB Finance Rs 49 million (325,000 shares traded), HNB Finance Rs 30 million (27 million shares traded), HNB Rs 27 million (70000 shares traded), NTB Rs 25 million (82000 shares traded ) and Lanka IOC Rs 21 million (666,000 shares traded). During the day 65 million shares volumes changed hands in 10433 transactions.

The Banking and manufacturing sector counters performed well. In the banking sector Sampath Bank let the market while manufacturing sector especially JKH also significantly performed well. With the fuel revision Land IOC also a significant stock at the floor.

Meanwhile, First Capital Treasuries said that Ramesh Schaffter resigned as a Non-Independent Non-Executive Director with effect from October 1, to facilitate the restructuring of the company’s board.

Yesterday the Central Bank announced the US Dollar rate as against rupee. The rupee was quoted flat at Rs 330.65/80 to the US dollar in the spot market , while bond yields dropped, dealers said.