Sri Lanka’s financial stability is being put to the test as the nation grapples with unmet revenue targets, unresolved debt restructuring, and the critique of its governance by the International Monetary Fund (IMF). The country’s struggles were highlighted on Friday when SJB MP Harsha de Silva cited widespread corruption as a major impediment to the disbursement of the second tranche of IMF funds.
De Silva urged the government to take action on the IMF’s 16-point plan, which includes forming an Advisory Committee by November 2023, publishing senior officials’ assets by July 2024, and enacting crime legislation by April 2024. The plan also calls for implementing a State-Owned Enterprise Reform Policy and creating a public registry by April 2024. De Silva further emphasized the need for transparency in revealing tax holiday costs.
These issues come in the wake of Central Bank Governor Dr. Nandalal Weerasinghe’s ongoing negotiations with international creditors such as Paris Club, India, and China, as well as with the IMF. Despite these challenges, Weerasinghe remains committed to completing the first review with the IMF, crucial for disbursement of a $330 million tranche under the Extended Fund Facility (EFF).
The IMF’s Senior Mission Chief, Peter Breuer, noted Sri Lanka’s inability to finalize a staff agreement during a recent visit. This comes ahead of President Ranil Wickremesinghe’s impending visit to China, which will focus on debt restructuring while adhering to an October-November timeline.
The Sri Lankan government’s ability to navigate these financial challenges and implement necessary reforms will be critical in securing further IMF funding and achieving economic stability.