Business

IMF says it relies on Sri Lanka’s institutions – not its own investigations

Published

3 months ago

2026/07/2

IMF Mission Chief for Sri Lanka Evan Papageorgiou and IMF Resident Representative in Colombo Martha Woldemichael address a press briefing at the Central Bank Headquarters on June 30.

Governance failures and corruption allegations

The International Monetary Fund (IMF) said on Tuesday that while governance and anti-corruption reforms remain a cornerstone of Sri Lanka’s economic reform programme, the Fund does not conduct its own investigations into allegations of corruption or governance failures. Instead, it relies on Sri Lanka’s institutional mechanisms to establish the facts.

The clarification came at the conclusion of an IMF mission to Colombo from June 24 to 30, led by Evan Papageorgiou, which reviewed the country’s progress under the Extended Fund Facility (EFF) programme.

Responding to a question from The Island Financial Review on how the IMF assesses serious public allegations involving corruption, public procurement or strategic sectors such as energy exports, Papageorgiou said the Fund’s role is not that of an investigative agency.

“We don’t conduct investigations,” he said. “We rely on Sri Lankan institutional findings such as CIABOC. There are state mechanisms for it and we rely on them.”

His response provides an important insight into how the IMF balances its growing emphasis on governance reforms with respect for domestic institutions, a question that has attracted increasing public interest as Sri Lanka implements one of the Fund’s most governance-focused reform programmes.

Elaborating on the IMF’s position, Martha Woldemichael, IMF Resident Representative in Colombo, explained that the IMF’s governance work is conducted through a structured diagnostic framework that examines the functioning of key state institutions rather than investigating individual allegations.

“We focus on what we call state functions,” Woldemichael said. She noted that the IMF’s Governance Diagnostic Assessment identifies priority areas such as fiscal governance and anti-money laundering and combating the financing of terrorism (AML/CFT), with recommendations designed to strengthen institutional safeguards and reduce opportunities for corruption.

Her remarks suggested that the IMF’s focus remains on strengthening systems, transparency and institutional resilience rather than determining culpability in individual cases.

The comments assumed significance because governance and anti-corruption reforms are central to Sri Lanka’s IMF-supported programme, as the multilateral lender has repeatedly stressed.

Earlier, presenting the mission’s findings, Papageorgiou said Sri Lanka’s economic recovery had faced fresh headwinds from the conflict in the Middle East, which contributed to higher energy prices, slower tourism growth and weaker reserve accumulation.

Headline inflation increased from 1.6 percent year-on-year in February to 5.5 percent in May following higher energy prices, while the Central Bank of Sri Lanka responded by raising policy interest rates by 100 basis points and deploying macroprudential measures.

He noted that the government had introduced temporary, on-budget relief measures, including fuel, electricity and fertiliser subsidies, along with targeted cash transfers for vulnerable households.

Despite these pressures, the IMF maintained that Sri Lanka should stay the course on reforms to preserve macroeconomic stability.

Papageorgiou said the authorities remained committed to restoring the primary fiscal surplus target of 2.3 percent of GDP in 2027. He called for continued efforts to improve tax compliance, broaden the tax base and strengthen public financial management.

He also stressed the importance of accelerating state-owned enterprise reforms, maintaining cost-reflective energy pricing, improving spending execution for post-cyclone reconstruction and expanding well-targeted social protection for vulnerable groups.

On debt management, the IMF observed that while Sri Lanka’s debt restructuring is nearing completion, efforts to strengthen the capacity of the Public Debt Management Office should be accelerated to support prudent borrowing practices and facilitate the country’s eventual return to international capital markets.

Papageorgiou added that monetary policy should remain cautious and data-driven amid continuing global uncertainty, while exchange rate flexibility, stronger cybersecurity and enhanced anti-money laundering safeguards would remain essential to protecting financial stability.

Looking beyond macroeconomic management, he reiterated that stronger governance reforms, a fairer and more efficient tax system, trade liberalisation, labour market reforms and an improved investment climate would be necessary to achieve durable and inclusive economic growth.

Asked separately whether the IMF would consider a successor programme after the current Extended Fund Facility expires, Papageorgiou declined to speculate, saying the immediate priority was the successful implementation of the existing programme. His remarks suggest that discussions on any successor arrangement are more likely to take place closer to the programme’s scheduled conclusion in March 2027.

The IMF said Sri Lanka’s overall programme performance will be formally evaluated during the Seventh Review of the Extended Fund Facility, with the timing of that mission to be announced later.

An independent analyst who closely follows Sri Lanka’s IMF programme told The Island Financial Review that, in his view, it is unlikely the IMF would undertake any scrutiny of the reported US$2.5 million loss linked to the January 2026 sovereign debt payment, as the Fund relies on Sri Lanka’s institutional framework and oversight mechanisms to address such issues.

By Sanath Nanayakkare

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Business

Rs 160 million + diesel discrepancy at Lakvijaya power plant prompts probe

Published

10 hours ago

2026/09/30

Sahan Weerasooriya

The Lakvijaya power plant in Norochcholai.

By Ifham Nizam

A Rs.160 million-plus diesel discrepancy at the Lakvijaya power plant in Norochcholai has triggered an internal investigation, raising questions over the handling of public funds and the controls governing fuel purchased for electricity generation.

The discrepancy surfaced during an internal audit of diesel supplied to the plant from the Kolonnawa and Sapugaskanda fuel terminals, according to senior officials familiar with the inquiry.

The audit has identified five transactions—two in December 2025 and three in January 2026—in which diesel recorded as delivered to the plant allegedly could not be fully accounted for in its physical stocks.

The investigation is now examining whether these were isolated discrepancies or part of a longer-running practice.

One transaction under scrutiny relates to January 16, when records reportedly showed that 10 diesel bowsers had arrived at the plant. Investigators subsequently found indications that the fuel stock corresponded to only nine bowsers.

A storekeeper responsible for the relevant fuel operation has reportedly been temporarily removed from those duties pending the investigation.

A senior official said investigators were reviewing historical records amid indications that similar discrepancies may have occurred over a longer period. If established, the financial exposure could therefore exceed the Rs.160 million currently identified.

The investigation is comparing fuel-terminal dispatch records, tanker movements, plant-entry records, receiving documents and physical stocks to establish exactly how much fuel was dispatched, received and accounted for.

That audit trail will also be critical in determining who authorised, received and certified the disputed consignments, and whether established controls were followed.

Relevant documents were reportedly transferred from Norochcholai to the company’s Colombo head office on September 26 for further examination, with electricity-sector security personnel assisting in the transfer.

The internal audit has also reportedly uncovered expired chemical stocks worth several hundred thousand rupees in the plant’s stores. Investigators are examining whether further inventory-management irregularities occurred.

The matter was also reportedly taken to the Puttalam Police Special Crimes Investigation Unit on September 26.

When contacted by Puttalam-based journalist Hiran Priyankara Jayasinghe for The Island Financial Review, Lakvijaya Power Plant Manager Nalaka Kumara confirmed that an investigation was under way but declined to provide further details.

The financial issue is direct: if the plant paid for diesel it did not receive, public-sector funds were spent without the electricity sector receiving the corresponding fuel.

Business

Sri Lanka Food Processors Association holds 29th Annual General Meeting

Published

10 hours ago

2026/09/30

Sahan Weerasooriya

The Sri Lanka Food Processors Association (SLFPA) successfully convened its 29th Annual General Meeting (AGM) on September 23, 2026, at the Water’s Edge Hotel, Battaramulla. Bringing together key industry stakeholders and member organizations, the event served as a platform to review milestone achievements from the 2025/2026 term and outline strategic priorities for the nation’s food and beverage processing sector.

At the AGM, the new Executive Committee for 2027/2028 was appointed, comprising: Honorary President Aruna Senanayake C.W. Mackie PLC Imme. Past President Thusith Wijesinghe Trans Continental Packaging & Commodities (Pvt) Ltd.

President Elect Nadishan Guruge Meadlee Trading Co. (Pvt) Ltd.

1st Vice President Damitha Perera Forbes & Walkers Commodity Brockers (Pvt) Ltd.

2nd Vice President Rasika Seneviratne Diesel & Motor Engineering PLC 3rd Vice President Deepal De Alwis Neochem International (Pvt) Ltd.

Honorary Secretary Amila Weerasinghe Nestle Lanka Limited.

Asst. SecretaryDineth Alahakoon Country Style Foods (Pvt) Ltd.

Honorary Treasurer Sameera Jayathilaka Westmann Engineering Company (Pvt) Ltd.

Asst. Treasurer Niroshan Dalpethado C D De Fonseka & Sons (Pvt) Limited. In addition to the above office bearers, the following ten Executive Committee Members were appointed:

Sanjeewa De Silva Unilever Sri Lanka Limited Sheran De Alwis MA’S Tropical Food Processing (Pvt) Limited

Thusitha Ekanayake Anods Cocoa (Pvt) Ltd.

Vijitha Govinna Plenty Foods (Pvt) Limited Ms. Praharshi Wickramasekara International Commodity Exports (Pvt) Ltd.

Sanjeewa Niroshan SGS Lanka (Pvt) Ltd. Kushan Amarasinghe Finagle Lanka (Pvt) Ltd.

Rangajeewa Hettiarrachchi Fonterra Brands Lanka (Pvt) Ltd.

Harindra Abeyrathna Vision Technologies International (Pvt) Ltd. Thilina Weerasekara Ceylon Cold Stores PLC

The event was proudly supported by key industry partners, with SGS Lanka (Pvt) Ltd serving as the Platinum Sponsor. Unilever Sri Lanka Ltd. and Nestlé Lanka Ltd. joined as Gold Sponsors, Ceylon Agro Industries – Prima as the Silver Sponsor, while Lanka Exhibition & Conference Services (LECS) and Hero Nature Products (Pvt) Ltd., supported as Bronze Sponsors.

The proceedings concluded with a vote of thanks delivered by Hony. Secretary Deepal De Alwis, followed by cocktails and a fellowship networking session, providing an opportunity for members to connect and strengthen industry ties.

Business

Uber brings the ‘business class of back seats’ to Sri Lanka with Uber Black

Published

10 hours ago

2026/09/30

Sahan Weerasooriya

New premium ride option expands Uber’s portfolio from affordable Moto and Tuk rides to premium on-demand travel

Uber announced the launch of Uber Black in Sri Lanka, bringing its premium ride experience to the country for the first time. Designed as the “business class of back seats,” Uber Black combines premium vehicles and highly-rated drivers for riders looking for greater comfort, quality and a more elevated travel experience.

The launch comes as demand for premium products and experiences grows across Sri Lanka, with consumers seeking greater choice and quality in their everyday experiences. Uber Black brings this choice to on-demand mobility, whether for an airport journey, an important business meeting, a special occasion or simply when riders want to travel in greater comfort.