The International Monetary Fund (IMF) staff and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the combined 5th and 6th Reviews of Sri Lanka’s reform program supported by the IMF’s Extended Fund Facility.

According to the IMF, Sri Lanka will have access to about USD 700 million in financing once the review is approved by the IMF Executive Board.

In a statement, the IMF said that the economic reforms implemented by the Sri Lankan authorities have continued to support the recovery, with reserves accumulating and real GDP growth and revenue mobilization outperforming expectations. 

However, Sri Lanka is significantly exposed to the Middle East conflict and needs to build back better following Cyclone Ditwah.

The IMF further stated that advancing reforms is even more critical now to safeguard macroeconomic stability and maintain the economy on a path towards recovery and inclusive growth. 

Building economic resilience is a necessity to better withstand exogenous shocks amid an uncertain environment, it added. 

Full statement by IMF Mission Chief for Sri Lanka, Evan Papageorgiou:

IMF staff and the Sri Lankan authorities have reached staff-level agreement on the combined Fifth and Sixth Reviews under the 4-year Extended Fund Facility (EFF) arrangement. The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

The staff-level agreement is subject to IMF Executive Board approval, contingent on: (i) the restoration of cost-recovery electricity and fuel pricing while protecting the vulnerable and (ii) the completion of the financing assurances review, to confirm multilateral partners’ financing contributions and assess adequate progress with debt restructuring.

Upon completion of the Executive Board review, Sri Lanka would have access to SDR 508 million (about US$700 million), bringing the total IMF financial support disbursed under this arrangement to SDR 1,778 million (about US$2.4 billion).

Sri Lanka’s ambitious reform agenda continues to deliver commendable outcomes. The economy grew by 5 percent y/y in 2025. Inflation has returned to positive territory and rebounded to 2.2 percent y/y in March, and gross official reserves reached US$7 billion in end-March 2026. Fiscal performance in 2025 was strong, primarily supported by taxes on motor vehicle imports. Debt restructuring is nearing completion, with the successful completion of Sri Lankan Airlines’ debt exchange and further progress in finalizing remaining bilateral agreements.

Sri Lanka is significantly exposed to the Middle East conflict, which has heightened energy prices, disrupted a key air hub for tourists, and affected Sri Lankans working in the region. Authorities have ameliorated disruptions to economic activity by securing sufficient fuel supplies for households and industries. At the same time, the country needs to address the infrastructure and spending needs caused by Cyclone Ditwah. Heightened downside risks to the economy from disaster risks, persistent trade policy uncertainty and the conflict in the Middle East emphasize the urgency to accelerate the reform momentum to safeguard macroeconomic stability, enhance Sri Lanka’s resilience to shocks, and maintain the economy on a path toward recovery and inclusive growth.

On this front, it is important to continue building fiscal space through strong revenue measures and prudent spending execution. This requires sustained efforts to improve tax compliance, broaden the tax base, address revenue leakages, and enhance public financial management. It is instrumental to restore and maintain cost-recovery fuel and electricity pricing while assisting the most vulnerable. Continued vigilance is needed to minimize fiscal risks and safeguard fiscal discipline.

As Sri Lanka starts building back better, projects should be prioritized judiciously and spending executed transparently and in compliance with the Public Financial Management Act. Any fiscal support in response to exogenous shocks should be well-targeted, carefully costed, and timebound. Protecting the poor and vulnerable, who are disproportionately affected, should remain a priority, and this calls for the steadfast strengthening of social safety nets by improving their targeting, adequacy, coverage, and shock-responsiveness.

It is important for monetary policy to remain data-dependent and agile to safeguard price stability in the face of shocks. Central bank independence should continue to be upheld, including by continuing to prohibit monetary financing of the budget. Rebuilding foreign reserves while allowing for exchange rate flexibility is a necessity amid global uncertainty. Resolving non-performing loans, promoting sound credit growth, and addressing vulnerabilities in some small licensed finance companies will help safeguard financial stability.

The publication of the 2026 government action plan on governance reforms is welcome; effective implementation will help advance the anti-corruption agenda and support growth. It will be key to uphold the independence of Sri Lanka’s anti-corruption body (CIABOC), support the reliability of the beneficial ownership registry, and strengthen fiscal governance through sound legislation on public-private partnerships, state-owned enterprises, public procurement, and public asset management. Unlocking strong and durable growth for all Sri Lankans requires staying the course on reforms, including by sustaining trade liberalization efforts, accelerating digitalization initiatives, streamlining business regulations, and modernizing labor legislation to reduce rigidities. 

The IMF team held meetings with His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Labor Minister and Deputy Minister of Finance and Planning Prof. Anil Jayantha Fernando, Honorable Deputy Minister of Economic Development Nishantha Jayaweera, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Dr. Harshana Suriyapperuma, Senior Economic Advisor to the President Mr. Duminda Hulangamuwa, Chief Advisor to the President on Digital Economy Dr. Hans Wijayasuriya, Governor of Southern Province Prof. Susiripala Manawadu, and other senior government and CBSL officials. The IMF team also met with parliamentarians, representatives from the private sector, civil society organizations, and development partners.

We would like to thank the authorities for the excellent collaboration during the mission, including during our visit to Galle in the Southern Province. We reaffirm our commitment to support Sri Lanka at this uncertain time. (Newswire)

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The Ministry of Transport, together with the Department of Motor Traffic, today (10) signed an agreement with a new company to restart the printing of vehicle number plates.

The agreement was signed by the Commissioner General of the Department of Motor Traffic, the Secretary of the Ministry of Transport, and the Board of Directors of the relevant private company.

Speaking at the occasion, Commissioner General of the Department of Motor Traffic, Kamal Amarasinghe, stated that according to the agreement, the company must commence printing number plates within three months.

He further said that preparing this agreement took a long time, and therefore, it was submitted to the Cabinet and signed after receiving approval and guidance from the Attorney General.

However, several rounds of initial discussions were held with the company, and it is expected that the work will begin within about two months, the Commissioner General added.

He also mentioned that this project is valued at around Rs. 3 billion and has been awarded to the company for a period of five years starting today. (Newswire)

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Sri Lanka signed the agreement for the 2026 Hajj pilgrimage on Sunday (09) in Jeddah, Saudi Arabia, with the official Hajj quota allocated to Sri Lanka standing at 3,500. 

The agreement was signed by the Sri Lankan delegation, headed by the Deputy Minister of Religious and Cultural Affairs, Muneer Mulaffer and the Deputy Minister of Hajj and Umrah of Saudi Arabia, Dr. Abdulfattah Bin Sulaiman Mashat. 

The agreement outlines the mutual understanding and commitment of both governments to facilitate and serve the Sri Lankan pilgrims participating in Hajj 2026. As per the agreement signed yesterday, the official Hajj quota allocated to Sri Lanka stands at 3,500. 

During the signing, Deputy Minister Muneer Mulaffer expressed the appreciation of the Government of Sri Lanka for the excellent arrangements made by the Saudi authorities for Hajj 2025, and reaffirmed Sri Lanka’s readiness to continue its close collaboration with the Ministry of Hajj and Umrah to ensure a successful Hajj 2026 for Sri Lankan pilgrims. He also took the opportunity to elaborate on the measures taken by the Sri Lankan government to regularise the hajj operations in the country, including the draft Hajj Act. 

Chairman of Sri Lanka  Hajj Committee Reyaz Mihular elaborated on the Committee’s regulatory role and the operational processes being implemented for the upcoming Hajj season. 

Deputy Minister Mulaffer is also scheduled to meet with Dr. Tawfiq Fawzan Alrabiah, the Saudi Minister of Hajj and Umrah, and engage with the Hajj service provider. 

The Sri Lanka delegation for the signing ceremony includes Director of the Department of Muslim Religious and Cultural Affairs, M.S.M. Nawas, Acting Consul General in Jeddah, Mafusa Lafir, Medical Coordinator Dr Azeez Mohamed Shihan and Hajj Coordinator Dr. M.N.M. Ahsraff. (Newswire)

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The visiting International Monetary Fund (IMF) staff and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the Fifth Review of Sri Lanka’s reform program supported by the IMF’s Extended Fund Facility. 

According to an IMF statement, once the review is approved by the IMF Executive Board, Sri Lanka will have access to about US$347 million in financing.

The IMF further states that the economic reforms implemented by the Sri Lankan authorities have continued to support the recovery, with inflation progressing to target, reserves accumulating, and real GDP growth and revenue mobilization outperforming expectations, while performance under the program has been strong.

“Advancing reforms is key to ensuring macroeconomic stability, anchoring the recovery, and equipping Sri Lanka to better withstand external shocks amid an uncertain global environment,” it added. 

An International Monetary Fund (IMF) mission team led by Evan Papageorgiou visited Sri Lanka from September 24 to October 9, 2025, to discuss recent macroeconomic developments and progress in implementing economic and financial policies under the Extended Fund Facility (EFF) arrangement. 

At the end of the mission, Papageorgiou issued the following statement:

“IMF staff and the Sri Lankan authorities have reached staff-level agreement on the Fifth Review under the 4-year Extended Fund Facility (EFF) arrangement. The arrangement was approved by the IMF Executive Board for a total amount of SDR 2.3 billion (about US$3 billion) on March 20, 2023.

“The staff-level agreement is subject to IMF Executive Board approval, contingent on: (i) Parliamentary approval of the 2026 Appropriation Bill in line with program parameters and (ii) the completion of the financing assurances review, to confirm multilateral partners’ financing contributions and assess adequate progress with debt restructuring.

“Upon completion of the Executive Board review, Sri Lanka would have access to SDR 254 million (about US$347 million), bringing the total IMF financial support disbursed under the arrangement to SDR 1,524 million (about US$2.04 billion).

“Sri Lanka’s ambitious reform agenda continues to deliver commendable outcomes. The economy grew by 4.8 percent y/y in 2025H1 and we expect growth to remain solid in 2025. Inflation has returned to positive territory and in September prices rose by 1.5 percent y/y. Gross official reserves reached US$6.1 billion at end-September 2025. Fiscal performance in 2025H1 has been strong, primarily supported by taxes on motor vehicle imports. Debt restructuring is nearing completion.

“Program performance is strong, underpinned by good fiscal revenue outcomes and improvements in external resilience. The reform momentum should be sustained to safeguard macroeconomic stability and enhance Sri Lanka’s resilience to shocks. This is particularly important given heightened downside risks to the economy from persistent trade policy uncertainty and geopolitical tensions.

“The 2026 Budget should be in line with program parameters to continue building fiscal space on the back of strong revenue measures and prudent spending execution. This requires sustained efforts to improve tax compliance, broaden the tax base, and tackle revenue leakages by strengthening the tax exemption frameworks. Enhancing public financial management, avoiding the reemergence of expenditure arrears, and promoting high-quality and efficient public expenditure, including by addressing capital spending under-execution, will contribute to safeguarding fiscal discipline and transparency.

“At the same time, it is instrumental to maintain cost-recovery energy pricing, strengthen the governance of state-owned enterprises (SOEs), and resolve their legacy debts to ensure financial viability and minimize fiscal risks. Upcoming bills on public-private partnerships, SOEs, public procurement, and public asset management should be consistent with the Public Financial Management Act and best practices.  

“Protecting the poor and vulnerable should remain a priority. There is scope to strengthen the design of the welfare benefit payment scheme to improve the targeting, adequacy, and coverage of social spending.

“Accelerating the finalization of bilateral debt agreements with the remaining official and commercial creditors is key to restoring debt sustainability and improving investor confidence. A swift operationalization of the Public Debt Management Office will be a key step towards prudent debt management practices.

“It is important for monetary policy to remain data-driven and to ensure price stability. Central bank independence should continue to be safeguarded, including by continuing to refrain from monetary financing of the budget. Efforts should continue to rebuild external buffers through reserve accumulation to adequate levels, while allowing for exchange rate flexibility. Resolving non-performing loans, strengthening governance and oversight of state-owned banks, and improving the insolvency and resolution frameworks are important to foster credit growth and safeguard financial sector stability.

“It is crucial to speed up the implementation of governance reforms outlined in the government’s action plan. Advancing procurement reforms, strengthening the AML/CFT framework, prioritizing anti-corruption measures in revenue administration, including digitalization, and implementation of electronic asset declarations will contribute to reducing corruption vulnerabilities. Recruitment at the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) should be accelerated and CIABOC’s independence safeguarded in line with the Anti-Corruption Act. Structural reforms will be key to lifting Sri Lanka’s potential growth.

“The IMF team held meetings with His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Prime Minister Dr. Harini Amarasuriya, Honorable Labor Minister and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, Honorable Minister of Industry Mr. Sunil Handunnetti, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Dr. Harshana Suriyapperuma, Senior Economic Advisor to the President Mr. Duminda Hulangamuwa, Chief Advisor to the President on Digital Economy Dr. Hans Wijayasuriya, Governor of Central Province Prof. Sarath Abayakon, and other senior government and CBSL officials. The IMF team also met with parliamentarians, representatives from the private sector, civil society organizations, and development partners.

“We would like to thank the authorities for the excellent collaboration during the mission, including while visiting the Central and Uva provinces. We reaffirm our commitment to support Sri Lanka achieve strong, sustainable growth.” (Newswire)

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Cabinet approval has been granted to sign the amended agreement between Sri Lanka and the Maldives on mutual legal assistance in criminal matters. 

The government said that in September 2022, the Cabinet gave its approval for entering into an agreement between Sri Lanka and the Maldives on mutual assistance in criminal matters. 

After granting this approval, the Maldivian side proposed several more amendments to the proposed agreement due to which it was not signed. 

A revised new draft was later prepared with the agreement of both parties and the clearance of the Attorney General has been received for that draft. 

Accordingly, the Cabinet approved the proposal presented by the Minister of Justice to sign this agreement and subsequently ratify the agreement by the diplomatic missions of the two countries. (NewsWire)

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The contract agreement to permit China Petroleum & Chemical Corporation (Sinopec) to enter Sri Lanka’s fuel retail market was signed at the Presidential Secretariat today.

According to the President’s Media Division (PMD), negotiations have been completed with Sinopec Fuel Oil Lanka (Pvt) Ltd and its parent company in China and Singapore in this regard.

The PMD stated that the negotiations were focused on awarding a long-term contract regarding the importation, storage, distribution, and sale of petroleum products in Sri Lanka. 

The negotiations were conducted following the recommendations of the Cabinet-appointed Special Committee for this purpose.

The signing of the contract comes after the government announced in April that China’s Sinopec, United Petroleum of Australia, and RM Parks of the USA are slated to enter Sri Lanka’s retail market under a collaboration with Shell PLC.

It was reported at the time that they will be given licences with a validity of 20 years to import, store and distribute fuel in Sri Lanka, while they will also be provided 150 CPC fuel stations under the scheme. (NewsWire)

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