Thursday May 28, 2026
Thursday May 28, 2026
Wednesday, 27 May 2026 00:30 - - {{hitsCtrl.values.hits}}
The Central Bank Governor Dr. Nandalal Weerasinghe yesterday said the International Monetary Fund (IMF) program provides sufficient flexibility for Sri Lanka to make policy adjustments, including targeted subsidies and revisions to key performance targets, depending on evolving economic conditions.
Addressing concerns following the post-Monetary Policy Review meeting media briefing, Dr. Weerasinghe stressed that the IMF-supported reform framework was not rigid and allowed authorities to respond to external shocks and domestic economic pressures through negotiations and periodic reviews.
“This is not a fixed arrangement without room for adjustment. If circumstances change, the Government can negotiate and there is flexibility within the program,” he said.
The Governor also rejected suggestions that the IMF had prohibited subsidies altogether. “There is nothing in the IMF program that says the Government cannot provide subsidies. It is up to the authorities to decide and justify such measures, while maintaining broader fiscal and pricing discipline,” he said.
He recalled that the Government had already allocated supplementary funding worth Rs. 500 billion post-Cyclone Ditwah last year, pointing out that targeted assistance measures remained permissible within the program framework.
Dr. Weerasinghe explained that while the IMF program contains limits and conditions related to subsidies and fiscal management, Sri Lanka had continued to comply with those requirements. “There are subsidy limits within the framework, and those conditions have been met,” he said.
He noted that certain adjustments had already been incorporated during the combined fifth and sixth reviews of the IMF-backed Extended Fund Facility (EFF) program. “The IMF Executive Board will approve the combined fifth and sixth reviews of Sri Lanka’s EFF program on Wednesday,” he added.
Responding to questions on discussions with the IMF regarding Sri Lanka’s Net International Reserve (NIR) targets, the Governor said such targets are reviewed periodically and adjusted depending on changes in global and domestic economic conditions.
“If the situation changes further in the coming quarters, there could be additional adjustments during future reviews. The process involves consultation and negotiation, taking into account both global and domestic conditions,” Dr. Weerasinghe said.
The Governor also noted that cost-reflective pricing requirements linked to fuel pricing under the IMF program had also been maintained.
Amid growing debate over the future of Sri Lanka’s IMF engagement as the country moves closer toward completing the current EFF arrangement.
Asked whether Sri Lanka should seek a successor program amid growing debate over the future of IMF engagement as the country moves closer toward completing the current EFF arrangement, Dr. Weerasinghe said the decision ultimately rests with the Government.
“Whether the country enters into another arrangement is a matter for the Government to decide,” he said.
