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.”
Business
Advocata Institute highlights regulatory barrier limiting women’s overtime earnings
Advocata Institute says that, a regulatory barrier prevents Sri Lankan women achieving pay parity with their male counterparts despite recent legislative amendments that have opened doors for women to work night shifts.
Despite the 2024 and 2026 liberalizations of the Shop and Office Employees Act (SOEA), which allowed women over 18 to work night shifts in IT, BPO, and hospitality sectors, women remain legally barred from maximizing their income due to rigid overtime restrictions.
Under current regulations, women cannot be employed under the Shop and Office Act for more than nine hours per day, a limit that strictly includes overtime. While Regulation 6 of the Act permits up to twelve hours of overtime per week, this daily “hard cap” creates a practical barrier that prevents women from accessing the full overtime entitlement available to male workers. This creates a regulatory paradox: while the law now permits women to work at night, it simultaneously restricts them from working the hours necessary to take home the same pay as a man performing the same role.
The urgency for reform is underscored by the Sri Lanka Labour Force Survey for the third quarter of 2025, which reveals a significant participation gap. Female labour force participation stands at 33.9 percent, compared to 68.6 percent for men. Closing this gap is a key structural reform priority under Sri Lanka’s International Monetary Fund Extended Fund Facility (EFF) programme, which highlights the importance of modernizing labour laws to expand labour supply and support long-term economic growth.
Debates on reforming these restrictions are often framed around the concern that removing gender-specific protections could expose women to exploitation. However, a woman’s vulnerability in the labour market is shaped less by the absence of gender-specific laws and more by structural challenges such as inadequate public transport, poor workplace infrastructure, weak enforcement of law and order, and limited access to childcare.
Addressing these underlying barriers is critical to ensuring both protection and opportunity. True empowerment requires shifting the focus from paternalistic hour-caps to creating a safe, gender-neutral environment that allows women the agency to maximize their earnings and contribute fully to the national economy.
Business
Drifting lubricant barrels trigger oil spill on southern coast; 99% of clean-up completed
Authorities have traced the oil contamination reported along sections of the Hikkaduwa and Peraliya coastlines in the Galle District to drifting barrels of industrial lubricant, while rapid response teams have already removed almost all visible oil deposits from the affected beaches.
The Marine Environment Protection Authority (MEPA), together with the Sri Lanka Coast Guard, launched an immediate response after oil patches were detected along about a 20-metre stretch of coastline in the Hikkaduwa and Peraliya areas.
Addressing a media briefing at the Ministry of Environment, MEPA Chairman Samantha Gunasekara said emergency shoreline clean-up operations began on March 7 under the instructions of Environment Minister Dammika Patabendi.
“Nearly 99 percent of the oil patches have already been cleared from the affected coastal stretch,” Gunasekara said, adding that the swift intervention by authorities had prevented the incident from escalating into a wider marine pollution crisis.
Investigations carried out by MEPA have confirmed that the contamination originated from barrels containing Shell Corena S2 P 100 lubricant oil that had apparently been lost at sea and later drifted ashore.
The lubricant manufactured by Shell plc is commonly used to lubricate the internal components of reciprocating piston air compressors. Officials said the substance is not classified as a hazardous or toxic oil, easing initial fears of severe environmental damage.
MEPA General Manager Jagath Gunasekara said monitoring of the coastline was continuing to ensure that no additional oil patches washed ashore.
Meanwhile, the Department of Wildlife Conservation said there had been no confirmed reports of harm to marine animals, including sea turtles and coastal wildlife, following inspections in the affected areas.
Wildlife officials said they were continuing to keep the situation under close observation to ensure that marine fauna along the southern coast remained safe.
Authorities stressed that protecting the ecological integrity of the southern coastal belt—particularly around the Hikkaduwa marine area—remains a priority, while further investigations are under way to determine how the lubricant barrels ended up drifting in Sri Lankan waters.
By Ifham Nizam
Business
Support for psychological well-being: Launch of telemedicine psychology program in response to Ditwa Cyclone
The Sri Lanka College of Psychiatrists has launched an innovative telemedicine psychology program designed to provide essential support and mental health care to individuals adversely affected by the Ditwa Cyclone. This initiative is a vital response to the psychological challenges faced by the community in the aftermath of the disaster.
However, the implementation of this program has faced significant obstacles, primarily due to a considerable lack of access to smart devices among the target beneficiaries. Recognizing the urgency of this situation, S-lon Lanka (Pvt) Ltd has made a commendable contribution by donating tablet devices through its corporate social responsibility initiative, the “Suwasahana Charika” Program. This generous donation aims to bridge the technological gap, ensuring that individuals in need can access the psychological services offered by the telemedicine program.
The collaborative efforts were strengthened during a recent event that was attended by key figures, including Mr. S.C. Weerasekara, the Group Director / Chief Operating Officer of The Capital Maharaja Group, and Dr. Dashanthi Akmemana, the Chairman of the Sri Lanka College of Psychiatrists.
The Sri Lanka College of Psychiatrists expressed its gratitude to S-lon Lanka for its support and is committed to addressing the community’s mental health needs during this challenging time.
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