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Tuesday October 27th, 2026

IMF meeting on Sri Lanka Rapid Finance loan on Dec 19

ECONOMYNEXT – The Executive Board of the International Monetary Fund will meet on December 19 to consider a loan through its Rapid Finance Instrument, a notice posted on the lender’s website said.

Sri Lanka has sought a 200 million dollar loan the the RFI after Cyclone Ditwah hit in the last week of M November.

RELATED : Sri Lanka to go for 18th IMF program: never say never

Next year’s spending will go up at least by 500 billion rupees, radically altering a budget for 2026 on which the current IMF program targets are based.

An IMF team is expected in January 2026 to re-negotiate a staff level agreement in line with the new fiscal picture to complete the review which was originally set for December 15.

The RFI has no reviews and is disbursed upfront.

Following a rate cut in March and generally reduced deflationary policy, the central bank has not been able to build as much reserves as initially expected, though both government and its own reserve related debt has been repaid.

In December a series of budget support loans – which do not have a domestic spending component – has been approved especially by the Asian Development Bank which will help boost reserve or help repay debt.

The central bank currently provides dollars to the government for debt repayment.

Analysts had warned that Sri Lanka cannot cut rates on historical 12 month inflation statistics and given the obligation of the central bank to collect reserves and repay debt, rates are dictated by domestic credit and reserve targets, which are set after debt repayment.

Sri Lanka’s rupee has also depreciated in 2025 amid reduced deflationary policy, and excessive purchases of dollars by the central bank for new money (monetization of the balance of payments) which analysts pointed out leads to a selective denial of convertibility to private importers.

RELATED :

Sri Lanka interest rates are dictated by the IMF reserve target, not inflation

Sri Lanka’s exchange rate depreciation by ‘Political Ravishment’

Given the reluctance to conduct deflationary policy and lack of sufficient requirements in the IMF’s last program to reduce the central bank’s domestic asset stock, analysts have urged the Treasury to buy its own dollars like other importers, instead of depending on the central bank.

Sri Lanka defaulted in 2022 after aggressive macro-economic policy by macro-economists involving involving rate and tax cuts to target potential output, in what is generally referred to as full employment policies. (Colombo/Dec17/2025)

Sri Lanka Cabinet approves $60mn OPEC Fund loan for Mahaweli project Phase 2

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers has approved a proposal to enter into an agreement with the OPEC Fund for International Development (OFID) to secure a 60 million US dollar loan facility for Phase 2 of the Mahaweli Water Security Investment Program (MWSIP).

The total estimated cost for Phase 2 of the program is 536.5 million dollars, which the government plans to finance through co-financing arrangements with multiple development partners. The Asian Development Bank (ADB) has already agreed to provide 200 million dollars toward the program.

“Phase 2 of the Mahaweli Water Security Investment Program is planned for implementation to achieve the Government’s long-term objectives: enhancing food security in the Dry Zone, strengthening water resource management, improving resilience to climate change, and alleviating poverty,” Minister Nalinda Jayatissa said.

Following prior cabinet approval on July 20, 2026, to begin negotiations with OFID, the development fund confirmed its willingness to provide the 60 million dollar facility in two components of 48 million dollars and 12 million dollars.

The proposal was submitted by the President in his capacity as the Minister of Finance, Planning, and Economic Development.

Under Phase 2, key construction works include finishing the remaining section of the main tunnel with about seven kilometers of excavation, constructing 68 kilometers of open and covered canals, conduits, and short tunnels, and building an eight-kilometer canal section for the Ellapothana Irrigation Project.

The project will also establish commercial farming infrastructure, including around 13 pressurized distribution networks to supply reliable irrigation water for high-value and field crops.

The cabinet paper noted that the phase will also focus on:

“Transforming agricultural production systems by introducing climate-resilient value chains and expanding farmers’ access to financial services and agricultural project-related services.” (Colombo/Oct27/2026)

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Sri Lanka stocks close up, ASPI gains 0.27-pct

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed up on Tuesday, CSE data showed, with the benchmark All Share Price Index moving up 0.27 percent.

The ASPI was up 52.11 points at 19,693 (19,692.67), while the more liquid S&P SL20 was up 0.19 percent, or 10.44 points, at 5,612 (5,612.31).

Positive contributors to the ASPI were Dialog Axiata (up 0.48 percent at 42.20 rupees), Carson Cumberbatch (up 1.02 percent at 670 rupees), Ceylon Cold Stores (up 1.25 percent at 121.50 rupees), Laugfs Gas (up 5.07 percent at 37.30 rupees), and Lion Brewery (Ceylon) (up 1.86 percent at 1,849.75 rupees).

Colombo Dockyard (down 3.74 percent at 95.30 rupees), Vallibel One (down 1.19 percent at 83 rupees), Hatton National Bank (down 0.27 percent at 367.50 rupees), LOLC Finance (down 2.22 percent at 4.40 rupees), and LOLC Holdings (down 0.64 percent at 390 rupees) were top negative contributors.

Market turnover was 849.37 million rupees. Materials led turnover with 229.66 million rupees.

Digital Mobility Solutions Lanka announced a first interim dividend of 2.75 rupees per share for the financial year 2026/27, subject to withholding tax. The ex-dividend (XD) date is November 5, 2026, and the dividend payment is scheduled to be dispatched on November 25, 2026. (Colombo/Oct27/2026)

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Sri Lanka approves performance-based framework for SOE collective agreements

ECONOMYNEXT — Sri Lanka’s Cabinet of Ministers has approved a new performance- and sustainability-based framework for collective agreements in State-Owned Enterprises (SOEs), which will take effect from January 1, 2027, minister Nalinda Jayatissa said.

The decision follows an earlier cabinet decision when the government decided to extend existing collective agreements in state enterprises under their current terms and conditions until December 31, 2026, while preparing a revised structure for 2027.

To facilitate the transition, the Secretary to the Treasury appointed an expert committee tasked with reviewing the current collective agreement mechanism and formulating the new framework.

Following consultations with relevant stakeholders, the committee submitted its report.

According to Jayatissa, the expert committee recommended aligning workplace pacts with key statutory regulations:

“It is recommended that collective agreements be implemented within state-owned enterprises, subject to the Industrial Disputes Act, the Trade Unions Ordinance, the Shop and Office Employees Act, and other relevant labour laws.”

The new structure also addresses employee incentives and financial returns.

“Recommendations have also been put forward regarding a framework for profit-sharing and bonuses.” (Colombo/Oct27/2026)

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Sri Lanka awards Rs756.9mn road project to Asset Engineering

ECONOMYNEXT – Sri Lanka’s Cabinet has approved a proposal to award a road improvement contract to cover an additional section of roadway in the Central Province to Asset Engineering (Pvt) Limited, minister Nalinda Jayatissa said.

The contract is valued at about 756.9 million rupees (excluding taxes).

The project will upgrade the road from kilometre 10+500 to kilometre 16+890 on the Norwood-Bogawanthalawa-Campion (B329) route.

Bids were called and 3 bids were received, Jayatissa said. (Colombo/Oct27/2026)

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Sri Lanka to lease 15 plantation properties to investors

ECONOMYNEXT – Sri Lanka’s Cabinet has approved the long-term leasing of 15 state plantation properties to selected local investors, minister Nalinda Jayatissa said.

The assets are owned by the Sri Lanka State Plantations Corporation, the Janatha Estates Development Board and Elkaduwa Plantations Company.

The government had earlier called for expressions of interest from investors for 1,514 hectares of land, 10 tourist bungalows and scenic locations, and 15 inactive factories managed by the three plantation entities.

A total of 470 investors submitted expressions of interest, Jayatissa said, after which shortlisted applicants were invited to submit detailed proposals.

“The government received 44 proposals covering 50 land and property lots.”

“Cabinet approved the proposal to lease 15 selected land and property plots to investors on a long-term basis.”

The government expects the initiative to attract private investment and improve the utilization of underused plantation-sector assets, he said.

He did not respond to reporters’ questions on how long the lease periods are, or how much the government hopes to raise through the leasing, or if the lands and properties will be distributed among parties loyal to the government.

Historically, most lands under the SLSPC and JEDB originated from the 1972 and 1975 land reform laws, when large privately owned plantations were taken over by the state. Many tea, rubber and coconut estates were nationalized and later placed under state plantation entities. (Colombo/Oct27/2026)

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Sri Lanka Cabinet clears $100mn ADB loan for economic recovery

ECONOMYNEXT – Sri Lanka’s Cabinet has approved a 100 million US dollar loan agreement with the Asian Development Bank to support a macro-recovery programme aimed at strengthening economic resilience and expanding inclusive economic opportunities, minister Nalinda Jayatissa said.

The financing forms part of a larger 620 million US dollar policy-based lending package approved earlier to support Sri Lanka’s reform agenda under the International Monetary Fund’s Extended Fund Facility programme.

The latest tranche consists of a 50 million US dollar policy-based loan and a 50 million US dollar investment loan from the ADB’s ordinary capital resources.

The Department of External Resources has completed formal loan negotiations with the ADB, after which Cabinet approved a proposal submitted by President Anura Kumara Dissanayake in his capacity as Finance Minister to sign the agreement, Jayatssa said.

The Macro-Recovery Sector Development Programme was approved by Cabinet in September 2026 using part of the broader ADB funding package and is intended to support reforms designed to improve economic stability, resilience and inclusive growth. (Colombo/Oct27/2026)

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