Sri Lanka’s president boosted government workers’ pay and increased state pensions, seeking to shore up support before next year’s election as the economy emerges from its worst crisis in seven decades, Bloomberg News reported. Tax revenue is expected to increase more than 47% next year, President Ranil Wickremesinghe outlined in his budget speech in Colombo on Monday, after the government recently hiked the value-added tax rate and it clamps down on tax evasion. Borrowing will surge in order to recapitalize banks and pay off foreign debt, he said.
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A senior U.S. Treasury official on Monday said there were signs of "potential improvement" in sovereign debt restructuring cases and more vulnerable countries were expected to seek help, but further work was needed to accelerate the process, Reuters reported. Treasury Assistant Secretary for International Finance Brent Neiman noted advances in the cases of Zambia, Ghana and Sri Lanka over the past year, along with development of new technical approaches, adding his hope that Ghana would reach agreement on its external restructuring in the coming weeks.
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Sri Lanka's sovereign dollar bonds fell more than 2 cents on Thursday, Tradeweb data showed, after authorities from the island nation expressed "serious reservations" about a debt restructuring proposal put forward by international bondholders, Reuters reported. Sri Lanka is in the midst of a debt restructuring after defaulting last year during a punishing economic crisis. The November 2025 maturity fell at the quickest pace, losing 2.45 cents as of 0946 GMT, but most of the country's sovereign dollar bonds had lost 2 cents or more.
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China reached a tentative debt agreement with Sri Lanka, front-running separate talks the International Monetary Fund and other creditors are holding with the South Asian nation and catching them by surprise, Bloomberg News reported. The deal between Export-Import Bank of China and Sri Lanka was reached late last month, China’s Foreign Ministry said Tuesday, without providing details of the pact. The IMF, Paris Club members including Japan, and other lenders like India are expected to hold talks this week in Morocco on a debt restructuring plan.
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An International Monetary Fund (IMF) staff team will visit Colombo in a month's time for the first review on Sri Lanka's loan programme, Reuters reported. The Washington, D.C.-based lender approved a nearly $3 billion bailout for crisis-hit Sri Lanka in March. The Asian island is struggling with its worst financial crisis in over seven decades, triggered by a severe shortage of foreign exchange.
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Monetary policy transmission to the real economy in Sri Lanka is still incomplete, the governor of the country's central bank, Nandalal Weerasinghe, said at a LSEG FX Community Event on Monday, Reuters reported. Weerasinghe said he would like to see private sector interest rates come down further and at a faster pace, adding that the domestic debt restructuring is the most important focus for the debt-laden country in the near-term. "We would firstly like to see yields drop in line with policy rates and, from there, decline further. We are waiting to see this reaction from markets," he said.
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Sri Lanka eased restrictions on the foreign-exchange market to allow companies and individuals to send more dollars abroad. The rupee weakened a 15th day, Bloomberg News reported. Local companies would be allowed to transfer as much as $100,000 to set up or expand an overseas business, effective for six months starting from June 28, the central bank said in a statement on its website late Monday. The rupee fell 0.4% to 330.37 per dollar on Tuesday.
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Finance State Minister Shehan Semasinghe told Parliament yesterday that Sri Lanka could exit bankruptcy by September, the Daily News reported. He also mentioned that with the implementation of the Anti-Corruption Act, Sri Lanka will be transformed into a corruption-free country. The State Minister said this during the debate on the Central Bank Bill. Semasinghe also said that Sri Lanka has received GSP tax relief for another four years. That’s a big victory. International confidence has been confirmed about the economic stability of the country.
The Select Committee appointed to investigate Sri Lanka's bankruptcy will meet for the first time on Tuesday (18) in Parliament, Newsfirst reported. The meeting will focus on the committee's future course of action, Chair of the committee SLPP General Secretary Sagara Kariyawasam said. They will also discuss the names of those who will first be summoned before the committee. In the meantime, SJB General Secretary Ranjith Madduma Bandara will not be part of the committee. The SJB has decided to appoint an alternative committee instead.
SJB MP Harshana Rajakaruna said in Parliament yesterday that all SJB MPs will resign from the Parliamentary Select Committee (PSC) appointed to investigate the country’s bankruptcy, the Daily News reported. The MP said in a special statement in Parliament that the Speaker will be informed in writing in this regard. He said that it is very unfair to appoint the Secretary General of the same party that bankrupted the country as the chairman of the Select Committee while the Opposition has requested the chairmanship.