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(WION) Former Finance Minister Ali Sabry has credited Indian Finance Minister Nirmala Sitharaman with turning the tide in Colombo’s favour during a crucial meeting with International Monetary Fund (IMF) representatives over Sri Lanka’s economic crisis.
Speaking about the negotiations that led to Sri Lanka’s IMF programme, Sabry said India’s support went beyond diplomatic goodwill. Sri Lanka was facing severe economic problems at the time, including foreign exchange shortages, high inflation and shortages of fuel and medicines.
India was among the first countries to provide emergency financial support to Sri Lanka during the 2022 crisis. It extended billions of dollars in credit lines to help the country meet essential import needs. Sabry said India’s early support sent a strong message to the international community about Colombo’s ability to pursue an economic recovery.
Sabry said he faced a difficult response when he travelled to Washington for discussions with IMF officials. He said the organisation’s regional directors remained doubtful about Sri Lanka’s ability to secure support.
“When I went to Washington, I had a meeting with the regional directors, and they were very negative about Sri Lanka. They said 16 times this has happened. I was disappointed. You know, for the first time, we are trying to tell different things. They were not willing to listen. I thought they lacked empathy,” he said.
Sabry was scheduled to meet IMF Managing Director Kristalina Georgieva and IMF Deputy Managing Director Gita Gopinath at 03.00 pm. Before that meeting, he met Sitharaman for lunch.
Sabry said he told Sitharaman that his discussions with IMF officials had not gone well. He said she then assured him that she would speak to Georgieva before his meeting.
“In between this meeting, something happened. I had lunch with Nirmala Sitharaman. She asked me, Minister, how did the meeting go? I said, not that great. I said they were kind of reluctant and had a lot of issues. She said Don’t worry, I will meet Kristalina Georgieva before you. I will put a word,” he said.
Sabry said the atmosphere changed significantly when he later met the IMF leadership.
“When I went for the meeting with the IMF Managing Director, which is one of the most crucial meetings for me, the tone, the approach, the environment, everything had changed. Kristalina Georgieva told me that she had just finished a meeting with Nirmala Sitharaman, and 70-80% of the meeting was not about India, but Sri Lanka, he said.
Sabry said the episode became an important foundation for Sri Lanka’s economic recovery.
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MONETABRIEF – Sri Lanka has proposed more subsidized credit programs for several sectors in the 2027 budget amid a high inflation target which trigger high interest rates and destruction of domestic capital.
In 2027, Rs. 67,687 million has been allocated for interest subsidies and refinancing to banks,” President Anura Kumara Dissanayake said.
“Through this, it is expected to provide 174 billion rupees as concessionary loans to entrepreneurs through State and private banks.”
Sri Lanka started to have very high nominal interest rates after the central bank started to debase money from the early 1980s, the IMF’s Second Amendment to its articles allowed it to escape accountability.
Since 2015, under flexible inflation targeting, an economy that has been stabilized at great cost, has been repeatedly reflated to trigger external crises and eventual external default.
In 2026 the economy was reflated amid a budget surplus, depriving an excuse that macro-economsits used to escape accountability since February 1952.
A highly concessionary housing loan scheme of up to Rs. 5 million will be implemented to meet the housing needs of migrant workers. Under this scheme, steps will be taken to provide an interest subsidy of 10 percent for up to Rs. 3 million and an interest subsidy of 5 percent for the remaining Rs. 2 million.
It is proposed that, for the first Rs. 3 million, a contribution of 6 percent be borne by the Government and a contribution of 4 percent by the Sri Lanka Bureau of Foreign Employment, and for the remaining Rs. 2 million, a contribution of 3 percent be borne by the Government and a contribution of 2 percent by the Sri Lanka Bureau of Foreign Employment.
It is proposed to allocate a sum of Rs. 1,000 million in 2027 as the Government contribution for the implementation of this interest subsidy scheme.
It is proposed to provide concessionary loans of up to a maximum of Rs. 2 million at an annual interest rate of 3 percent to entrepreneurs for businesses operating home-based tourist accommodation, to improve such facilities and to start new home-based tourist accommodation, and it is proposed to allocate Rs. 100 million as the first phase for the payment of the necessary interest subsidies. Steps will be taken to provide the additional provisions required. It is expected to provide concessionary loans amounting to Rs. 7,500 million under this loan scheme.
It is proposed to provide a maximum loan amount of up to Rs. 500 million through banks at an annual interest rate of 5 percent to large-scale fisheries industrialists with export potential, fish product suppliers, boat manufacturers and manufacturers of other fishing gear required for the fisheries industry, to obtain the modern technology and other inputs they require. It is proposed to provide Rs. 1,000 million as interest subsidies for this purpose.
Through this, it is expected to provide loans amounting to Rs. 15,000 million.
With the aim of strengthening enterprises in rural areas and empowering Aswesuma beneficiaries, it is expected to provide loans to entrepreneurs through the Samurdhi Bank up to a maximum of Rs. 5 million at a concessionary annual interest rate of 4 percent.
In order to qualify for this loan facility, it is mandatory for such entrepreneurs to provide employment opportunities to at least five Aswesuma beneficiaries. It is proposed to allocate Rs. 200 million for interest subsidies for this purpose. Through this, it is expected to provide loans amounting to Rs. 5,000 million.
Pledge Loan Scheme for Small and Medium-Scale Paddy Mill Owners
It is proposed to implement the Pledge Loan Scheme for small and mediumscale paddy mill owners for the purchase of paddy at the Government guaranteed price as an interest-free loan scheme from 2027.
It is expected to provide financial facilities of Rs. 20,000 million through this programme. In addition to the Rs. 350 million currently allocated, further allocations are proposed to bear the additional interest subsidy of this loan scheme.
A special programme is essential for uplifting women-headed family units.
In particular, the living standards of such families living in rural areas are at a relatively low level. In order to strengthen such families economically, it is proposed to implement a group loan scheme of up to Rs. 1 million at a concessionary annual interest rate of 3 percent through the Samurdhi Bank.
Refinance and Interest Subsidy Loan Scheme for Reviving the Micro, Small and Medium Enterprise Sector (Re-MSME Plus)
The Government will provide an interest subsidy for the granting of a further Rs. 20,000 million in loans, in addition to the Rs. 30,000 million currently allocated to provide concessionary loans at an interest rate of 5 percent for the capital and working capital requirements of Micro, Small and Medium Enterprises under the Refinance Loan Scheme.
It is also proposed to allocate Rs. 200 million for this purpose as the first phase. Steps will be taken to provide the additional provisions required.
In order to make the fisheries sector eligible for this concessionary loan scheme, it is proposed to grant loans to enterprises engaged in the fisheriesindustry by considering only the business turnover in the definition of Micro, Small and Medium Enterprises.
Opposition Leader Sajith Premadasa yesterday accused the Government of abandoning its Marxist principles and embracing neoliberal economic policies, claiming that Budget 2027 had placed a greater burden on the poor while favouring the wealthy.
Addressing Parliament during the Budget debate, Premadasa said the Budget presented by President Anura Kumara Dissanayake had created “oppressive conditions” for the public instead of providing relief to those struggling with the rising cost of living.
He compared the Budget with the Buddhist teachings contained in the Cakkavatti Sihanada Sutta, which he said provided principles for governance, taxation, development and public welfare.
Premadasa also criticised the Government for what he described as a departure from the policies on which the NPP and JVP had sought a mandate from the people.
He recalled the JVP’s earlier criticism of the International Monetary Fund (IMF) and the World Bank and said the Government had now adopted the same economic path as its predecessors.
Describing Budget 2027 as a “Muhammad Ali budget”, Premadasa alleged that it “punches the stomach” of the common man and the poor while prioritising the wealthy.
He claimed that income inequality had widened between 2019 and 2025, with real household income among the poorest 20% declining by 19.6%, while that of the richest 20% had increased by 6.8%.
According to Premadasa, the income gap between the richest and poorest 20% had consequently widened from 11.2 times to 14.8 times, while the richest 20% now accounted for 55.8% of income.
He attributed the situation to inadequate wages, rising inflation and the erosion of social support.
Premadasa also questioned the Government’s claims regarding poverty and said international reports indicated that poverty remained a serious concern.
Turning to agriculture, he accused the Government of failing to honour its election promises to farmers, particularly on paddy prices and interest-free loans.
He claimed that paddy farmers were currently receiving around Rs. 95 to Rs. 98 per kilogram despite an earlier promise of Rs. 150, and alleged that support for other crops, including big onions, potatoes, chillies, fruits and upcountry vegetables, had also fallen short.
The Opposition Leader also criticised the Government’s handling of the IMF debt restructuring process, claiming that Sri Lanka had received a less favourable deal than Ghana and Senegal.
He specifically criticised the macro-linked bonds included in the debt restructuring agreement, arguing that higher economic growth could result in a reduction in the debt relief available to Sri Lanka.
Premadasa also questioned the Government’s support for micro, small and medium-scale enterprises (MSMEs), claiming that hundreds of thousands of businesses had fallen into distress and that adequate debt restructuring had not been provided.
He further criticised the Government’s progress on its digital economy programme, saying only five of 17 commitments made in the information technology sector had been fulfilled in 2026.
Questioning the progress of the proposed Digital ID and IT parks in Digana and Nuwara Eliya, he accused the Government of failing to deliver on its promises to the younger generation.
Premadasa also raised concerns over poverty alleviation, renewable energy, education, healthcare, fisheries, public sector salaries and the migration of professionals.
He questioned the absence from Budget 2027 of several relief measures he said had been promised by the NPP, including a reduction in electricity tariffs, benefits for senior citizens and measures to reduce fuel prices.
“The greatest betrayal is dimming, fading and destroying the hopes of 6.8 million people and the dreams of 22 million people who voted and did not vote,” Premadasa said.
He concluded by calling for a “middle path” based on social democracy and a social market economy, while rejecting what he described as both neoliberalism and extreme Marxism and socialism.
Continue Reading News Mayor Balthazaar warns of legal action over AI-generated Colombo flood videos Published
Colombo Mayor Vraie Cally Balthazaar on Friday warned that legal action would be taken against those responsible for creating and circulating AI-generated videos falsely depicting flooding inside the One Galle Face shopping mall.
Speaking to the media, the Mayor said several AI-generated videos had been circulated on social media following heavy rainfall in Colombo, showing floodwater inside the shopping complex.
Fact-checking organisation Fact Crescendo Sri Lanka has confirmed that a viral video claiming to show flooding inside One Galle Face was generated or manipulated using artificial intelligence.
The 14-second video, which circulated on Facebook and TikTok following heavy rainfall on November 6 and 11, purported to show floodwater near the mall entrance, with people walking through water close to an escalator and an Under Armour store.
However, Fact Crescendo said an examination of the footage revealed several indications of AI manipulation, including distorted facial features, unusual lettering and unnatural movements of the water.
An AI image detection tool indicated a 99% probability that a frame from the first scene was AI-generated, while Google’s SynthID Detector identified evidence of AI-generated or edited content in the second scene and its audio.
Fact Crescendo also contacted staff members at several outlets inside One Galle Face, who confirmed that floodwater had not entered or accumulated inside the shopping complex.
Although some water had reportedly accumulated in the parking area, the staff said conditions were not as severe as portrayed in the viral video.
The fact-checking organisation therefore concluded that the claim that One Galle Face had been flooded was false, although genuine flooding had occurred on several Colombo roads, including areas around Galle Face.
Colombo experienced heavy flooding following torrential rain on November 6, when 129 mm of rainfall was recorded within a few hours. Further heavy rainfall on November 11 also caused flooding and traffic disruptions in several parts of the city.
Mayor Balthazaar warned that those responsible for deliberately creating and disseminating such misleading AI-generated content could face legal consequences.
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