March 02, Colombo (LNW): Sri Lanka has received a crucial boost in its efforts to stabilise and reform its economy with the completion of the Third Review under the 48-month Extended Fund Facility (EFF) from the International Monetary Fund (IMF).
The approval, granted on February 28, allows Sri Lanka immediate access to approximately US$334 million, which will support the country’s ongoing economic policies and reforms.
However, what stands out in this latest agreement is that the IMF has refrained from imposing any new financial burdens on the Sri Lankan Treasury.
Deputy Minister Professor Anil Jayantha clarified yesterday (01) that the IMF’s primary focus was to prevent unnecessary costs being borne by the Treasury, particularly in relation to State-Owned Enterprises (SOEs).
“The IMF’s key concern is ensuring that the Treasury does not shoulder avoidable costs associated with SOEs,” Prof. Jayantha remarked. He highlighted the past challenges faced by the country, particularly in cases like SriLankan Airlines, where mismanagement and corruption led to significant financial strain.
“We’ve learned hard lessons from issues like corruption and unsustainable borrowing, especially with SriLankan Airlines,” he added.
In line with this, the IMF has encouraged a more disciplined and structured approach to restructuring SOEs. Prof. Jayantha emphasised that the IMF is not pushing for the privatisation of these entities but rather for their efficient management and reform to prevent them from becoming further financial drains on the national budget.
A new committee has been set up to oversee these state-owned bodies, with the aim of making them more self-sufficient whilst maintaining their service quality and affordability.
“The goal is to make sure that these enterprises continue to provide essential services at reasonable prices whilst avoiding monopolies or market failures,” he explained, underlining the importance of maintaining fair competition and quality within these sectors.
Looking ahead, Prof. Jayantha noted that Sri Lanka’s government is committed to meeting the benchmarks set by the IMF. Whilst the fourth review is expected to begin in April, he assured that the government remains open to making adjustments to the targets if required.
“We are prepared to discuss any necessary changes to the benchmarks, depending on the evolving circumstances,” he said.
In response to ongoing concerns about corruption, Prof. Jayantha revealed that progress is being made on the formulation of anti-corruption legislation, with necessary drafts currently being prepared.
The government remains focused on building a more transparent and accountable system to address issues that have plagued the country’s governance in recent years.
This latest step with the IMF signals a cautious but optimistic path forward for Sri Lanka as it works to stabilise its economy without imposing undue burdens on the state’s finances.
The government’s focus on reforming SOEs and tackling corruption will be key areas of progress as the country continues to navigate its economic challenges.
