Sri Lanka’s economy, poised to expand by 3 per cent in 2024, is rolling out a new law permitting the state to confiscate proceeds of crime, with backing from the International Monetary Fund (IMF). This legislation stands as a pivotal requirement for Sri Lanka’s £2.3 billion IMF programme, launched following the nation’s grappling with its severest financial turmoil in decades due to a sharp dip in foreign exchange reserves.
Bandula Gunawardana, addressing a cabinet briefing, underscored the imperative nature of this legislation, asserting, “There exists an urgent necessity for this law.” Sri Lanka, presently engaged in restructuring approximately £9.5 billion in foreign debt with bondholders following a default in May 2022, regards the debt restructuring process as indispensable for achieving economic stability. “Sri Lanka’s economy is on the path to stabilization, yet true stability will only be attained upon the conclusion of the debt restructuring process,” Gunawardana stressed.
The Proceeds of Crime Act (POCA) facilitates the judicial freezing and confiscation of proceeds of crime, while establishing a novel authority to oversee such seized assets. This enactment signifies the first governance assessment undertaken by the IMF in Asia. Sri Lanka’s central bank has underscored the importance of upholding the Extended Fund Facility agreement with the IMF and finalizing the debt restructuring process for economic rejuvenation.
