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IMF to begin talks with Lanka

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ECONOMYNEXT – The International Monetary Fund intends to begin discussions with Sri Lanka on a program to support the country, spokesman Gerry Rice said as the island is facing steep currency depreciation and inflation after an unusual bout of money printing to keep interest rates low.

President Gotabaya Rajapaksa said in a national address Wednesday said that he had given the go ahead for an IMF program after meeting senior staff of the lender in Colombo.

“The authorities have also indicated that they are actively considering an IMF-supported program,” IMF spokesman Gerry Rice said.

“We will discuss with the authorities how best we can assist Sri Lanka going forward, including during the Minister of Finance’s visit in Washington in April.”

The IMF has already called for tighter monetary policy to stop liquidity injections which create forex shortages.

The IMF has analyzed Sri Lanka’s economy in a staff report which has been submitted to the board, following annual Article IV consultations. The full report has not been made public, but key conclusions, including that the debt is unsustainable is now known.

The report also warned that the economy could implode unless actions was taken to halt monetary instability, though analysts say the IMF does not make a habit of modelling disaster scenarios.

Rice said the IMF had highlighted “the urgent need of implementing a credible and coherent strategy to restore macroeconomic stability and debt sustainability, while protecting vulnerable groups through strengthened, well-targeted social safety nets.”

With the debt deemed unsustainable, re-structuring or re-profling will also be required.

Sri Lanka for sometime has not had a working exchange rate regime, with a peg having lost credibility and parallel exchange rates emerging due to money printing.

In a program a float of the currency to end dual anchor conflicts (reserves sales for imports and money printing to maintain the policy rate) is a prior action. Though the exchange rate has been allowed to fall, a clean float has not yet been established.

Analysts have said the central bank should to remove a surrender requirement that effectively imposes a strong side convertibility undertaking in the style of a peg and further weakens the rupee.

Further policy rate hikes are also needed to make the float work.

If a float is not established, economic problems that took place at 200 to the US dollar, will continue to take place at a weaker level. The currency can be appreciated if required after domestic credit slows (consumption and investments slows) and sterilizing inflows.

An IMF program typically involves a tight reserve money program to stop inflation and block the validation of domestic prices as the currency weakens.

Tax hikes and spending cuts will reduce the budget deficit and domestic credit, keeping down the corrective interest rate. Sri Lanka’s private citizens are net savers and are incapable of triggering currency pressure.

A foreign reserve target is also given and reserves for imports are generally discouraged (sometimes a so-called disorderly market conditions intervention is allowed which however can undermine the currency unless they are unsterilized).

Debt re-structuring will also reduce the corrective interest rate and the need to immediately deploy more savings for debt repayment and leave space for reasonable growth path.

India is giving a 500 million US dollar credit and a billion dollar credit for food and medicines which can be used to finance the deficit if they are not used for subsidies.

Medicine credits can be used for the health budget directly or cash collected from private sector importers can be used to finance other expenses such as the salary bill, analysts say.

Unemployed graduates had progressively bloated the public sector and have become a key consumer of the productive efforts of society.

Classical economists and analysts have called for reforms to the central bank to outlaw intermediate monetary regimes (flexible exchange rates/soft-pegs) and go for a single anchor regime made up of a fully reserve-backed hard peg or a clean floating regime with a low inflation-driven monetary base and no foreign reserves.

Such a regime will eliminate the need for IMF programs in the future. A hard peg with a low inflating reserve currency in particular will also serve as a hard budget constraint and help social unrest.



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Jetstar to launch Australia’s only low-cost direct flights to Sri Lanka, with fares from just $315^

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It has been announced that Jetstar will take off for the first time from Australia to Sri Lanka in August next year, with the launch of the only direct low-cost service from Melbourne to the South Asian nation’s capital, Colombo.

From 25 August 2026, Jetstar will become the first Australian airline to operate this route, flying three times a week between Melbourne and Colombo and offering more than 100,000 low-fare seats a year on the new route.

Upgraded aircraft

This year-round service will be operated by Jetstar’s fleet of 11 widebody Boeing 787 Dreamliners which are progressively being upgraded from early next year to overhaul both the economy and business class cabins*.

The interior refit includes more than doubling the number of business class seats and installing Wi-Fi so customers can stream entertainment to their own devices.

The addition of a new lie-flat crew rest area to allow flights of up to 16 hours will open the door to even more incredible long-haul destinations in the future. The first of the upgraded aircraft is due to touchdown in Melbourne in late March 2026.

Sale fares 

The countdown is on to these new flights going on sale at midday today (8 December).

At that time, Jetstar will launch a 24-hour Route Launch Sale with one-way fares available between Melbourne (Tullamarine) and Colombo from only $315^ at jetstar.com.

Jetstar’s growth 

The launch of Melbourne to Colombo flights comes during one of the most exciting growth periods in Jetstar’s almost 22-year history.

Over the past two years, the airline has announced 26 new routes and welcomed 13 new aircraft, allowing travellers to take off more, for less.

2025 has been a standout year, with 14 new routes announced – nine of them international – with more exciting growth plans in coming years.

This year the Melbourne based carrier is also celebrating 10 years of operating domestically from Melbourne’s T4, having carried more than 50 million customers through the terminal.

Holiday peak travel

The new route announcement comes as Jetstar prepares for its biggest Christmas ever.

Jetstar is forecast to carry a record of almost six million passengers across its Australian, New Zealand, Japan and international network throughout December and January.

This includes a record 1.7 million passengers flying through Melbourne alone across the summer peak.

Jetstar CEO Stephanie Tully said the airline’s Melbourne to Colombo route will give Australians a new direct and affordable way to take off more to Sri Lanka.

“Colombo is an incredible destination, and from August next year, we’re excited to be making it easier for Aussies to experience everything the beautiful country of Sri Lanka has to offer.

“This new route out of our home base of Melbourne is part of a huge growth phase for Jetstar. We’ve added new destinations, more aircraft and we’re continuing to expand our international network to give travellers even more choice and opportunities to take off for less.”

Melbourne Airport Chief Executive Officer, Lorie Argus, welcomed Jetstar’s new flights to Sri Lanka as the airport and airline celebrate 10 years since the opening of Terminal 4.

“We’re thrilled to see Sri Lanka, one of the region’s fastest-growing destinations, become Jetstar’s 10th international destination from Melbourne.

“More Jetstar flights mean more legendary low fares – making it easier than ever for Victorians to explore this part of the world for leisure or to visit family and relatives.

“We’re marking a major milestone as we celebrate a decade since Jetstar moved into its home at Terminal 4 and it’s fantastic to see how our partnership has strengthened. A decade on, we’re proud to be Jetstar’s largest hub.”

Flight schedules

From 25 August 2026**

Flight Frequency Depart Arrive
JQ5

Melbourne – Colombo

Tuesday, Thursday and Saturday 12:00 17:50
JQ6

Colombo – Melbourne

Tuesday, Thursday and Saturday 19:50 10:00+1

**Schedule valid for 25 August – 03 Oct 2026, other periods vary based on daylight savings. 

*As the upgraded 787 are progressively rolled out, some flights will operate with upgraded aircraft and others with our existing 787 aircraft.

^Sale ends 12.00pm AEDT Tuesday 9 December 2025, unless sold out. Excludes checked bags. Prices based on payment by PayID, Jetstar voucher, Jetstar Gift Card, or bookings redeemed only in Qantas Points through jetstar.com. For other options, a Payment Fee applies. See jetstar.com/fees. Travel dates and other conditions apply. Flights from Melbourne (Tullamarine) to Colombo are subject to Government and Regulatory approval.

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Laws to curb unauthorised constructions to be strengthened

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The President emphasised that no room will be given in the future for unauthorised constructions and that the laws relating to them will be strengthened. The President further pointed out that failure to do so would lead the country to face an even greater disaster.

President Dissanayake stated that a separate unit will be established under the Reconstruction Presidential Task Force, which is to be set up shortly, to formulate legal policies and that this will enable long-term solutions to these issues.

President Anura Kumara Dissanayake made these remarks on Sunday (07)  afternoon  while participating in the Special District Coordination Committee meeting held at the Kurunegala District Secretariat.

The President instructed the relevant authorities to restore all damaged provincial roads and local council roads in the Kurunegala District to full functionality and reopen them for public use within the next two weeks.

He further stated that the allocations already set aside for this purpose should be utilized and that any roads that cannot be completed before 31 December, along with the required allocations, should be reported. The necessary funds will be allocated for these in the 2026 budget.

The district has recorded damage to 1,181l  ‘A’ and ‘B’ grade provincial roads due to the disaster, along with 35 bridges, 162 culverts and one embankment. Detailed discussions were held on restoring them urgently.

The President separately reviewed the measures taken to restore essential infrastructure including electricity, water supply and communication facilities that had been disrupted in the district due to the disaster. He emphasised that delivering services up to the end user is the responsibility of the service-providing institutions and highlighted the need for strong coordination among these institutions to overcome existing obstacles.

Officials reported that 12,729 hectares of paddy land in the Kurunegala District were fully damaged due to the disaster, of which 7,215 hectares remain cultivable, while 5,514 hectares cannot be cultivated.

The President instructed the Water Supply Board to provide temporary water where cultivation is hindered due to lack of irrigation water and directed authorities to minimise the extent of uncultivable land as much as possible to ensure harvesting. He also inquired into the programme for supplying paddy seeds and fertiliser to farmers.

Damage caused to maize, vegetables and other supplementary crops, as well as the compensation process for affected farmers, was also reviewed.

The President informed local council Chairpersons that a main responsibility for well-cleaning activities lies with the local councils and instructed them to expedite the work with the assistance of the Tri-Forces and voluntary organisations.

Highlighting the need for maintaining accurate data on livestock farms across the country, the President pointed out that existing laws may be insufficient for this purpose and stressed the need to revise them. He also noted that the lack of proper registration of livestock farms causes issues when granting compensation and other assistance.

Therefore, the President instructed officials to bring all livestock-related data into a single system, review it and promptly make policy decisions regarding compensation.

There were also discussions on reviving the inland fisheries industry, healthcare requirements and the reopening of schools.

Extensive discussions were held on identifying land for resettlement and granting compensation for damaged houses. The President instructed that Divisional Secretaries must play a major role in compensation payments and resettlement activities.

Meanwhile, Venerable Aluthgama Mangala Thero, Chief Incumbent of Maddeketiya, Gokarella Sangamu Raja Maha Viharaya has allocated 20 acres of temple land for the resettlement of affected families. The relevant documentation was handed over to the President.

A financial donation of Rs. 10 million from the North Western Provincial Cooperative Societies, associations and members coordinated by the North Western Provincial Cooperative Development Department along with a donation from  S.M. Wasantha Samarakoon, owner of Gokarella Rice Mill, was also handed over to the President.

Minister of Public Security and Parliamentary Affairs, Ananda Wijepala, Deputy Minister of Agriculture and Livestock, Namal Karunaratne, Deputy Minister of Women and Child Affairs , Namal Sudarshana, North Western Province Governor, Tissa Warnasuriya, district MPs from both government and opposition, local council Chairpersons, Secretary to the Treasury, Dr Harshana Suriyapperuma , Ministry Secretaries, Kurunegala District Secretary, Chandana Dissanayake, senior government officials and security forces leaders were present on this occasion.

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627 confirmed dead, 190 persons missing as at 6:00 a.m. today [08]

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The Situation Report issued by the Disaster Management Center at 0600hrs on 8th December 3035 confirms that 627 persons have lost their lives due to floods and landslide that occurred in the island during the past few days. The number of persons missing was 190.

 

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