Business
IMF Staff Level Agreements are not a matter any administration can afford to take lightly
What can Sri Lanka do if IMF leaves the negotiating table?
Professor Priyanga Dunusinghe at University of Colombo queries
By Sanath Nanayakkare
We cannot expect that IMF will always be there to support Sri Lanka if the country begins tinkering with the set of economic policies and reforms it needs to implement in exchange for financial assistance from the IMF, Priyanga Dunusinghe, a Professor in Economics in the Department of Economics at the University of Colombo said on 24th August 2024.
He said so in response to a question posed at him during ‘Paththaren Eha’ discussion televised live on Independent Television Network (ITN).
“The Extended Fund Facility (EFF) programme depends on Sri Lanka’s economic situation and policy priorities, as well as the IMF’s technical assessment of the country’s financial and economic outlook. IMF Staff Level Agreements are very technical, so Sri Lankan authorities should not attempt to deviate from them for political reasons. What can Sri Lanka do if the IMF leaves the negotiating table”, he queried.
Further speaking he said:
“The IMF has made a careful analysis of Sri Lanka’s debt stock and has shown the country the way to manage its debt repayment under a ‘debt sustainability programme’. The macroeconomic targets were given to Sri Lanka by the IMF mainly based on this programme. You would have heard from time to time that IMF and Sri Lankan authorities came to Staff Level Agreements. Such an agreement is arrived at after lengthy debates and discussions between the two sides on technical points, fiscal situation and hard data. You asked me whether this agreement can be amended.
Yes, a new government coming to power can consider amendments to the agreement. But there arises the issue whether such amendments can be made without affecting the fiscal targets in the existing framework. For example, if tax revenue as a percentage of GDP is to be increased to 15.3% by 2027, it has got to be achieved, otherwise we won’t be able to continue working with the IMF programme. Alternate ways can be discussed as to how this tax share can be mobilized. But if someone suggests we abolish VAT and we collect taxes from tax evaders instead, the IMF knows that it can’t be done within the stipulated time frame. The IMF programme is crafted by experts based on data and analyses and timelines. If someone goes to the IMF and says the agreement needs to be amended, then the data which has already been used in the current programme would have to be proven erroneous.
Furthermore, the fact that we are entering into re-negotiations will mean that our credibility will be at stake. If that happens not only the IMF, the World Bank, the ADB, the bilateral and multilateral creditors also will begin to lose faith in us. Secondly, are there any countries in the world that amended IMF agreements and came out of their economic troubles? Greece attempted to do this, but it didn’t work. It is now said Greece will not be able to restore its pre-crisis level which prevailed in 2008, until 2031. This is the outcome of tinkering with the IMF programme. This is true for Argentina, Ecuador and other similar countries. So, attention must be paid to these international experiences when trying to make amendments to the IMF programme”
“Dr. Montek Singh Ahluwalia, a key player for over three decades in Indian economic reforms visited Sri Lanka some time back. When asked about amending the IMF agreement he said,” Trying to amend the agreement is imprudent. What you need to do is; show the IMF that you are acting upon achieving the given targets as quickly as possible because going into re-negotiations will reflect badly on staff level agreements and would have adverse consequences on Sri Lanka. Dr. Ahluwalia even said that such a move could draw flak from IMF officials.”
Professor Dunsinghe said that the IMF reform programme has been painful to the people, but it is now starting to bear fruit and urged Sri Lankans to move ahead on the difficult path to benefit from it.
“Within 2 years, Sri Lanka was able to come out of the crisis. Locally, this feat is not acknowledged due to political differences. But internationally, it is recognized as an unprecedented achievement. Sri Lankan people will have to wait until the plant becomes a tree and the tree gives its yield. We are an impatient nation that always rushed to eating the leaves before the fruits were borne. So, it will be useful to keep in mind that if we rush to eat the leaves again, we will miss the fruits.”
The Commonwealth may offer ‘a glimpse of hope for Sri Lanka to overcome effects of US tariffs’, says former chairman, British- Sri Lanka Chamber of Commerce, London, Jayampathi Perera (Jay).
‘As Sri Lanka grapples with the high tariff imposed by the US’ Donald Trump administration, the Commonwealth, a voluntary association with 56 nations, many of which share historical ties and economic cooperation could offer a valuable life line for us in the long term. Although the US has given a period of just 90 days until they consider the next round of tariffs, now is the time for us to consider alternatives, Perera explained.
Perera added: ‘While the US has traditionally been a significant trading partner, especially for garments and tea exports, overdependence on such a single market can prove risky and we are already experiencing such a situation.
‘The Commonwealth provides a platform for trade diversification, allowing Sri Lanka to strengthen economic ties with other member countries, especially in Africa and elsewhere to conduct safe business with comparative ease.
‘These countries share legal frameworks and business standards and could not only ease market access but also present safe business platforms to establish joint ventures for the future.
‘Several Commonwealth nations have preferential trade agreements with developing member states.
‘For instance, the UK’s Developing Trading Scheme (DCTS) offers duty free access for many Sri Lankan goods. Provided we concentrate on a priority list of products that can compete with others in a highly competitive market, we may be able to offset some of the negative impacts of US tariffs.’
‘Beyond trade, Commonwealth collaboration also promotes investment, capacity building and technical assistance. Sri Lanka can leverage these partnerships to boost local industries, enhance value -added production and improve competitiveness in global markets.
‘Sri Lanka can tap into business networks and regional cooperation opportunities, particularly in South East Asia and Africa, to explore new markets and foreign direct investment.
‘During the recently held Commonwealth Trade and Investment Summit, April – 2025 London (CTIS), I did manage to present my own idea of presenting Sri Lanka as a viable manufacturing partner for the Commonwealth.
‘My idea was overwhelmingly shared by Lord Marlon, Chair of the organisation and was supported by many members of the Committee who immediately sat with me for a round table discussion.
‘Lord Marlon himself is very keen to provide assistance to Sri Lanka and has requested me to introduce any Sri Lankan company who needs assistance in identifying strong business partners in respective countries.
‘Although some in Sri Lanka might find fault with this idea of diluting our production capabilities by extending production into foreign territories, with the current global situation and the possibility of losing GSP+ status in the near future, for Sri Lanka this might be a lifeline to stay in business.
‘Furthermore, Sri Lankan apparel manufacturers with decades of experience behind them with access to reliable quality fabric,
supported by well-oiled logistics and compliance systems with most experienced managers, trainers and operational consultants’ can certainly add value to this whole process.
‘Considering some African countries such as Lesotho, Kenya, the Cameroons, Rwanda and many more benefiting from AGOA (African Growth and Opportunity Act), which allows duty-free access to the US for many goods, including textile and apparel, this avenue might provide joint ventures to maintain sales.
‘May be that’s why some major players of Sri Lanka’s apparel industry have already shifted their production to Kenya.
‘Sri Lanka’s engagement with the ommonwealth offers an alternative path forward and by strategically leveraging these partnerships, the nation could not only cushion the economic blow but also lay the foundation for a more diversified and resilient trade future.’
by Hiran Senewiratne
Business
CG Hospitality’s iconic ‘The Farm at San Benito’ joins prestigious Marriott Autograph Collection
In a strategic conversion idea brought to fruition, Marriott International Inc. and CG Hospitality signed an agreement to convert The Farm at San Benito, the well-renowned Philippines wellness retreat, to an Autograph Collection resort, as part of the portfolio of Premium Marriott Hotels.
The first in the Philippines expected to open its doors end Q3 2025, the Autograph Collection brand is home to a curated selection of individual boutique hotels, each chosen for their inherent craft and distinct perspectives on design and hospitality and immersive moments that leave a lasting imprint. The Farm at San Benito, Autograph Collection is slated to be Marriott’s 13th property in the Philippines and will also be part of Marriott Bonvoy, the global travel program from Marriott International.
The CG Corp’s leisure arm headed by Managing Director of CG Corp Global and CG Hospitality Global Rahul Chaudhary, has a total of 14 properties in Sri Lanka including the very first property that set the Group’s path into the global hospitality industry, the Taj Samudra in Colombo way back in 2001. “That foray into hospitality with the Taj Samudra and two properties in the Maldives paved the path for CG to partner with Sri Lanka’s largest hotel group – the Jetwing Hotels, headed by former Chairman of PATA, Hiran Corray,” states Chaudhary. “With three iconic properties, namely Jetwing Vil Uyana, Jetwing Sea and Jetwing Sigiriyaaya under the Jetwing umbrella, we inked our next Sri Lankan chapter in hospitality with Ceylon Hotels Corporation in partnership with Sanjeev Gardiner, with ten beautifully located properties around the country.”
In addition to a strong hospitality footprint in Sri Lanka, CG also made its maiden foray into the country’s financial industry in 2023 with the acquision of Union Bank and more recently, inked a vertical with John Keells Holdings for BYD vehicles in Sri Lanka.
Business
Aitken Spence Travels continues its leadership as the only Travelife-Certified DMC in Sri Lanka
Aitken Spence Travels, Sri Lanka’s leading destination management company, has once again been recertified with the prestigious Travelife Certified sustainability certification. This recognition underscores the company’s long-standing commitment to sustainability and health & safety best practices, reinforcing its leadership position in responsible tourism.
Travelife, established with the support of the European Commission, is the leading international sustainability certification for the travel sector. It is actively endorsed by renowned travel associations, including ABTA (The British Travel Association) and PATA (The Pacific Asia Travel Association). The Travelife standard is in full compliance with the Global Sustainable Tourism Council (GSTC) criteria. ISO 26000 covers Social Responsibility themes encompassing aspects such as the environment, labour relations, human rights and biodiversity. This globally respected certification sets a high standard for sustainability in the travel industry and is awarded to organisations that exhibit a genuine commitment to ethical business operations, environmental conservation, and social responsibility.
Aitken Spence Travels successfully met over 150 rigorous criteria during the certification process, demonstrating its unwavering dedication to environmental responsibility, community engagement, and sustainable tourism. From reducing its carbon footprint to fostering local community well-being, the company continues to integrate sustainability at the core of its operations.
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