Sri Lanka promises to make payment clearance as soon as feasible

Colombo, June 24 (Daily Mirror) - The recent US $2.5 million cyber theft from the newly established Public Debt Management Office (PDMO)—where a sovereign debt repayment to Australia was intercepted via systemic digital breaches, had a direct bearing on Sri Lanka’s programme with the International Monetary Fund (IMF), according to a top official.

IMF Resident Representative Martha Tesfaye Woldemichael told Daily Mirror in an emailed interview that the continuous performance criterion on preventing new external payment arrears was not observed due to the missing external debt payment to Australia.

As a result, in order to receive the tranches under the Fifth and Sixth Reviews, the authorities requested a waiver of nonobservance on the basis of minor breach given the size of the missed payments (0.002 percent of GDP) and the adoption of corrective actions, she said.

These include clearing the arrears as soon as feasible, implementing standard operating procedures for the Public Debt Management Office (PDMO) by end-June, and operationalizing the new debt management information system by end-August to facilitate, inter alia, robust verification of account details and payment amounts, according to her.

“Together with other development partners, the IMF remains closely engaged to continue strengthening the PDMO’s capacity through technical assistance. There has been progress since its establishment, with the PDMO making strides on publishing its first Medium-Term Debt Strategy and Annual Borrowing Plan, and conducting weekly domestic bond auctions. Sustained capacity building is crucial to promote prudent debt management practices, deepen domestic debt markets, and support Sri Lanka’s return to international capital markets,” she said.

Asked for a comment on the fraud at the National Development Bank (NDB) , she said that it originated in employee misconduct but was not identified timely due to inadequate internal and external controls. The Central Bank responded promptly – suspending the bank’s cash dividend distribution and pledging system-wide liquidity support to prevent any spillover to confidence in the broader banking sector. A forensic audit into the incident has also been initiated, she added.