By The Pulseline News Desk
Opposition Leader Sajith Premadasa has called for Sri Lanka to pursue a successor agreement with the International Monetary Fund (IMF) after the current programme expires in March 2027, arguing that the next phase should focus on poverty reduction, export growth, employment and easing the economic burden on households.
Premadasa made the call following comments by Minister Bimal Rathnayake that the Government intends to conclude the current four-year Extended Fund Facility (EFF) when it expires on March 19, 2027, while continuing normal engagement with the IMF and World Bank.
Rathnayake has said the Government does not currently see a need for another IMF programme linked to debt restructuring.
In a special statement, Premadasa said the end of the EFF should not be interpreted as the completion of Sri Lanka’s economic recovery, arguing that significant vulnerabilities remain despite the greater macroeconomic stability achieved under the programme.
He said Sri Lanka would require a credible post-2027 economic framework to strengthen debt sustainability, maintain adequate foreign exchange reserves, continue fiscal reforms, preserve creditor confidence and retain access to international markets.
However, Premadasa argued that future economic policy should place greater emphasis on the impact of reforms on ordinary people.
He called for a successor IMF arrangement aimed at reducing poverty, promoting exports and providing greater economic opportunities for farmers, fishermen, workers, entrepreneurs, self-employed people and those in the services sector, while also addressing employment among young people.
Premadasa said the country needed an economic framework that could maintain fiscal and macroeconomic stability while creating conditions for households to improve their living standards.
Despite his criticism of aspects of the existing IMF programme, he said Sri Lanka should continue implementing it with discipline and credibility until its conclusion.
Debt and reserves
Premadasa also raised concerns over Sri Lanka’s debt position, citing IMF projections that public debt would remain high even after the current programme ends.
The IMF’s latest projections put public debt at 100.1% of GDP in 2026 and 96.9% in 2027. Premadasa said these levels remained a significant vulnerability and questioned whether Sri Lanka would be sufficiently protected against future debt-related pressures.
He also referred to the debt sustainability thresholds requiring average gross financing needs to remain below 13% of GDP and average foreign-currency debt service below 4.5% of GDP.
The IMF projects average gross financing needs at 12.6% of GDP between 2027 and 2032, while average foreign-currency debt service is projected at 3.3% of GDP. The Fund has nevertheless continued to assess Sri Lanka’s debt sustainability risks as high.
Premadasa also criticised the handling of restructured debt, including macro-linked bonds, arguing that arrangements made under the previous administration and continued by the present Government could impose additional burdens on the public.
Foreign exchange reserves were another key concern raised by the Opposition Leader.
He said Sri Lanka must have sufficient reserve buffers when the EFF ends to withstand external shocks, particularly amid continuing geopolitical and global economic uncertainty.
Premadasa cited IMF projections that gross official reserves would rise to around US$8.65 billion in 2026 and US$11.78 billion in 2027, equivalent to 73.6% and 96.9%, respectively, of the IMF’s Assessing Reserve Adequacy metric.
He argued that stronger reserve buffers would be essential to prevent a recurrence of the foreign exchange shortages and supply disruptions experienced during the 2022 economic crisis.
Growth and employment
Premadasa also called for a stronger focus on private investment, foreign direct investment and export-led growth, arguing that Sri Lanka needs to move towards an economy capable of generating higher levels of foreign exchange and employment.
He claimed poverty had risen to between 30% and 40% and called for a future economic programme specifically focused on poverty reduction and job creation.
The Opposition Leader said many young Sri Lankans who had completed their O/Ls, A/Ls and university education remained without adequate employment opportunities, making job creation a key priority for the next phase of economic policy.
The current EFF was approved in March 2023 and is scheduled to expire on March 19, 2027. The IMF’s latest mission to Sri Lanka concluded on September 23, with discussions on the Seventh Review expected to continue in the near term.
The IMF has said Sri Lanka’s economy continues to demonstrate resilience, while warning that risks remain tilted to the downside.
The emerging debate is therefore not only over whether Sri Lanka should seek another IMF programme after 2027, but also over what should replace the current crisis-driven adjustment framework once the EFF expires.
For the Government, the stated objective is to complete the existing programme and continue engagement with international financial institutions without immediately entering another IMF arrangement. For Premadasa, the next phase should retain macroeconomic discipline while placing greater emphasis on household incomes, poverty, employment, exports and investment.
With debt and external vulnerabilities remaining significant and the Government preparing its economic policy beyond the current IMF programme, the shape of Sri Lanka’s post-2027 economic framework is set to become a key policy issue.
Leave a comment