Govt. reiterates commitment to reforms ahead of $ 700 m IMF tranche

 Deputy Finance and Planning Minister 

Dr. Anil Jayantha Fernando

• Deputy Finance and Planning Minister Dr. Anil Jayantha Fernando stresses foreign exchange position will be strengthened with healthy inflows expected
• Remains committed to fiscal reforms, targets to achieve 2032 debt-to-GDP goal by end-2026

Deputy Finance and Planning Minister Dr. Anil Jayantha Fernando yesterday said the Government expects to receive the next $ 700 million tranche under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) program on 27 May, while expressing confidence that continued multilateral inflows, fiscal discipline, and ongoing reforms would help strengthen Sri Lanka’s foreign exchange position despite external shocks linked to the Middle East conflict.

Speaking in Parliament, Dr. Fernando said Sri Lanka was continuing efforts to strengthen foreign exchange inflows through exports, workers’ remittances, and international financial assistance.

He expressed confidence that the IMF Executive Board would approve the release of the next tranche later this month under Sri Lanka’s EFF program.

The Deputy Minister also said Sri Lanka expects to secure up to $ 480 million from the Asian Development Bank (ADB) during 2026.

In addition, he said the country anticipates receiving $ 150 million from the World Bank and a further $ 50 million from an affiliated institution.

Dr. Fernando said the Government does not expect significant difficulties in managing the country’s foreign exchange position in the period ahead.

Meanwhile, Dr. Fernando said the Opposition was presenting a misleading picture regarding the rising nominal value of Government debt when currency depreciation increases the rupee value of external debt.

Foreign exchange-related movements are recorded under applicable accounting standards as unrealised losses without an immediate cash flow impact on the Government.

“We are determined to realise the debt-to-GDP reduction target set for 2032 well in advance, by the end of this year. Borrowing is not a bad thing. What matters is how debt is managed, which previous Governments failed to do,” Dr. Fernando said.

The Deputy Minister said the Government had introduced fiscal and balance of payments discipline, creating space to allocate additional funding for Cyclone Ditwah-related relief measures and to introduce a Rs. 100 billion targeted subsidy package aimed at helping the economy absorb shocks stemming from the Middle East conflict.

Dr. Fernando also accused the Opposition of attempting to create fear and uncertainty over the recent depreciation of the rupee.

He said some Opposition figures were claiming that the rupee would weaken to Rs. 370 against the US dollar, which was the exchange rate level seen during the final stages of the Gotabaya Rajapaksa administration.

“The Opposition says we should get ready to leave when the rupee reaches Rs. 370 against the US dollar. But in 2022, the Government was not sent home because the currency depreciated. It was because the economy had collapsed due to mismanagement and bad policies. The country had no reserves and had to default on its debt,” Dr. Fernando said.

“This time is different, and that is why we can expect IMF disbursements and other multilateral funding; there is confidence in the economy,” he added.

The foreign exchange market began to panic after the Central Bank of Sri Lanka’s (CBSL) statement to the Committee on Public Finance (CoPF) on the unfolding global economic realities. Banking treasury sources said importers began booking forward contracts expecting the rupee to depreciate, while exporters held onto earnings expecting higher conversion rates.