• State Finance Minister Shehan Semasinghe says Govt. focused on finalising an in-principle agreement with China Development Bank 
• Expresses optimism about reaching consensus with bilateral creditors by end of this month
• Describes IMF second review approval as a “people’s victory”
• Highlights while short-term hardships persist, medium and long term are expected to show significant economic improvements
• Warns any deviation from current program could lead to economic instability and uncertainty
• Says approval of second review will unlock third tranche of $ 336 m, bringing total received from $ 3 b program to $ 1 b boosting investor confidence
• Credits President Ranil Wickremesinghe’s leadership for steering economy towards recovery through albeit unpopular, economic policies, reforms
• Points to Economic Transformation Bill as key reform measure to drive sustainable growth; address ongoing challenges

By Charumini de Silva 

State Finance Minister Shehan Semasinghe yesterday announced that the Government is focusing on finalising an in-principle agreement with bondholders and is nearing the completion of such an agreement with the China Development Bank.

Addressing a media briefing, Semasinghe indicated that while a specific timeline cannot be outlined, both parties are eager to finalise an agreement. 

“We are very hopeful of reaching consensus with bilateral creditors soon, possibly by the end of this month,” he stressed. 

On Wednesday, the International Monetary Fund (IMF) Executive Board approved the second review of Sri Lanka’s $ 3 billion Extended Fund Facility (EFF) program.

Semasinghe hailed the IMF approval as a “people’s victory”, outlining its significance in reinforcing economic stability and resilience. 

“Despite the short-term hardships, the medium and long term are expected to bring significant improvements in the economic outlook,” he noted.

He underlined the importance of continuing reform efforts, as economic recovery remains fragile and gradual. “Any deviation from the current program will only push the country into uncertainty and economic instability,” he warned.

The State Minister acknowledged the IMF’s observation regarding not meeting the indicative target on social spending, while all quantitative targets for end-December 2023 were met. “There were some delays, and the Government had already negotiated with the IMF on the specific delays, agreeing on shifting implementation dates due to practical difficulties,” he explained.

Semasinghe said the approval of the second review will unlock the third tranche of $ 336 million, bringing the total received from the $ 3 billion program to $ 1 billion. He added that this development will boost confidence on Sri Lanka’s economic outlook among local and international investors.

Semasinghe praised the leadership of President Ranil Wickremesinghe for steering the economy towards recovery through the introduction of necessary, albeit unpopular, economic policies and reforms. 

“This was not an easy task. It was a massive challenge that he took over and proved that we can no longer rely on popular promises,” he remarked, highlighting the need for consistent policies over popular political promises.

He credited the support from the Official Creditor Committee co-chaired by India, Japan, France, and China, along with the IMF Board Members, IMF Management and Mission Team, as pivotal in completing the review. He also acknowledged the dedication of the Central Bank, Finance Ministry, and other Government agencies, as well as the support from the Cabinet of Ministers, Parliamentary representatives and authorities who supported the Government’s economic recovery efforts.

Looking ahead, Semasinghe pointed to the Economic Transformation Bill as a key reform measure, outlining goals, actions and timelines to address ongoing challenges and drive sustainable growth.

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