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Economy on track but no room for policy errors- IMF
The Executive Board of the International Monetary Fund (IMF) completed the third review under the 48-month Extended Fund Facility (EFF) Arrangement, allowing the authorities to draw SDR 254 million (about US$334 million). This brings the total IMF financial support disbursed so far to SDR 1.02 billion (about US$1.34 billion), according to a statement from it.
The EFF arrangement for Sri Lanka was approved by the Executive Board on March 20, 2023 in an amount of SDR 2.286 billion (395 percent of quota or about US$3 billion. The program supports Sri Lanka’s efforts to restore and maintain macroeconomic stability and debt sustainability while protecting the poor and vulnerable, rebuild external buffers, and enhance growth-oriented structural reforms including by strengthening governance.
Following the Executive Board discussion on Sri Lanka, Mr. Kenji Okamura, Deputy Managing Director, issued the following statement:
“Reforms in Sri Lanka are bearing fruit and the economic recovery has been remarkable. Inflation remains low, revenue collection is improving, and reserves continue to accumulate. Economic growth averaged 4.3 percent since growth resumed in the third quarter of 2023. By end-2024, Sri Lanka’s real GDP is estimated to have recovered 40 percent of its loss incurred between 2018 and 2023. The recovery is expected to continue in 2025. As the economy is still vulnerable, it is critical to sustain the reform momentum to ensure macroeconomic stability and debt sustainability, and promote long-term inclusive growth. There is no room for policy errors.
“Program performance has been strong with all quantitative targets met, except for the indicative target on social spending. Most structural benchmarks due by end-January 2025 were either met or implemented with delay.
“Sustained revenue mobilization is crucial to restoring fiscal sustainability and ensuring that the government can continue to provide essential services. Boosting tax compliance and refraining from tax exemptions are key to maintaining support for economic reforms. To ease economic hardship and ensure the poor and vulnerable can participate in Sri Lanka’s recovery it is important to meet social spending targets and continue with reforms of the social safety net. Going forward, social support needs to be well-targeted towards the most disadvantaged so as to promote inclusive growth with limited fiscal space. Restoring cost-recovery electricity pricing without delay is needed to contain fiscal risks from state-owned enterprises. A smoother execution of capital spending within the fiscal envelope would foster medium-term growth.
“The progress to advance the debt restructuring to restore Sri Lanka’s debt sustainability is noteworthy. The recent successful completion of the bond exchange is a major milestone towards restoring debt sustainability. Timely finalization of bilateral agreements with creditors in the Official Creditor Committee and with remaining creditors is a priority now.
“Monetary policy should prioritize maintaining price stability, supported by sustained commitment to prohibit monetary financing and safeguard Central Bank independence. Continued exchange rate flexibility and gradually phasing out the balance of payments measures remain critical to rebuild external buffers and facilitate rebalancing.
“Resolving non-performing loans, strengthening governance and oversight of state-owned banks, and improving the insolvency and resolution frameworks are important priorities to revive credit growth and support the economic recovery.
“Prolonged structural challenges need to be addressed to unlock Sri Lanka’s long-term potential, including steadfast implementation of the governance reforms.”
Colombo, Sri Lanka – May 27, 2025 — Sri Lanka is experiencing intensified weather conditions due to the active southwest monsoon, with heavy rains, strong winds, and rough seas expected to persist over the coming days, according to the country’s Department of Meteorology.
Showers and thunderstorms are forecast for the Western, Sabaragamuwa, and North-Western provinces, as well as in the districts of Nuwara-Eliya, Kandy, Galle, and Matara. Rainfall in some areas is expected to exceed 100 mm, potentially leading to localized flooding and disruptions.
Other regions across the island may also experience occasional showers.
Strong winds ranging between 40 to 50 km/h are likely in the western slopes of the central hills, Northern, North-Central, and North-Western provinces, along with the districts of Hambantota and Trincomalee. The public is urged to exercise caution during thunderstorms, particularly in areas prone to lightning and sudden gusts of wind.
Marine Warnings Issued
The Department of Meteorology has also issued advisories for seafarers and fishing communities. Sea areas off the coast from Chilaw to Kankasanthurai via Puttalam and Mannar, and from Galle to Pottuvil via Hambantota, are expected to be very rough, with wind gusts reaching 60–70 km/h. Naval and fishing vessels have been strongly advised not to venture into these waters until further notice.
Other coastal regions, including areas from Chilaw to Galle via Colombo and from Kankasanthurai to Trincomalee via Mullaitivu, may also experience wind speeds of 50–60 km/h. Wave heights in affected zones could rise between 2.5 to 3.0 meters, with the potential for dangerous swell waves and surges along the shorelines.
Authorities urge all communities, especially those in low-lying and coastal areas, to remain alert and follow future updates from the Department of Meteorology.
Colombo, Sri Lanka – United Nations Resident Coordinator in Sri Lanka, Marc-André Franche, met with Minister of Foreign Affairs, Foreign Employment, and Tourism, Vijitha Herath, to discuss the UN’s continued support for Sri Lanka’s national reconciliation process.
During the meeting, Mr. Franche welcomed the new government’s commitment to national unity, reconciliation, and accountability. He noted that these policies offer hope to those who value peace and stability, and reaffirmed the UN’s willingness to provide sincere and meaningful support for the government’s future efforts in these areas.
Mr. Franche also expressed optimism about fostering a friendly and productive partnership with the new administration in the coming period.
Additionally, he informed the Minister of plans to hold a commemorative event in Sri Lanka this October to mark the 70th anniversary of the United Nations. He also commended Sri Lanka’s contributions to the UN Peacekeeping Force.
Colombo, May 26, 2025 – Lord Hannett of Everton, the UK Prime Minister’s Trade Envoy for Sri Lanka, is currently on an official visit to Colombo from May 25th to 28th. This marks his first visit to Sri Lanka since his appointment in January 2025, the British High Commission here said on Monday.
During his visit, Lord Hannett is set to meet with key ministers of the Sri Lankan government. He will hold discussions with the Minister of Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe, and the Deputy Minister for Industry and Entrepreneurship Chathuranaga Abeysinghe, UK high commission in Colombo stated, according to the British High Commission.
These discussions will focus on Sri Lanka’s trade and investment landscape, the opportunities for and challenges faced by UK companies, and plans for reforms aimed at improving the ease of doing business to support the shared economic growth of both nations.
Lord Hannett will also be engaging with representatives from Sri Lanka’s Export Development Board (EDB).
Lord Hannett will engage with a wide range of representatives from across the business community. This includes senior UK and Sri Lankan business personalities, UK transnational education providers, women business leaders, members of the committee of the Council for Business with Britain, and visits to UK companies operating in the market.
Ahead of his visit, Lord Hannett shared his thoughts, stating, “I’m excited to be visiting Colombo for the first time in my capacity as the UK’s Trade Envoy to Sri Lanka. I look forward to insightful conversations with the Government and the business community about strengthening the UK-SL trade relationship.” He added, “It will also be great to witness first-hand the operations of some of the UK companies in the market.”
He further remarked, “Having recently met some of the beneficiaries of UK-funded programmes supporting Sri Lankan exports to the UK, it will be a great privilege to co-launch the SheTrades webpage, alongside Sri Lanka’s Export Development Board, a resource which will be a great support to women-led businesses in Sri Lanka looking to access international markets. The strength of the UK-Sri Lanka educational partnerships is particularly impressive with Sri Lanka being the second largest market for UK transnational education. I look forward to my discussion with education providers to explore how we can continue to contribute to the growth of Sri Lanka’s skilled workforce.”
The UK High Commission in Colombo stated that the UK is keen to see Sri Lanka reduce market access barriers and improve ease of doing business and enhance transparency, which will further boost the UK-Sri Lanka trade and investment relationship. Sri Lanka is a valuable trading partner for the UK, with bilateral trade worth approximately £1.6 billion. The trade balance is skewed in Sri Lanka’s favour, with the UK serving as Sri Lanka’s second-largest export market.
Sri Lanka Braces for Enhanced Monsoonal Showers and Rough Seas Amid Active Southwest Monsoon
UN Pledges Support for Sri Lanka’s Reconciliation Efforts
UK Prime Minister’s Trade Envoy for Sri Lanka Arrives in Colombo
New tracker to monitor Sri Lanka’s governance and anti-corruption reforms
Navy apprehends 06 persons for engaging in illegal night diving in Mannar
