By: Vibhuti Pathak
Sri Lanka has introduced a new law allowing the state to seize proceeds of crime, backed by the International Monetary Fund (IMF), according to Bandula Gunawardana at a cabinet briefing. The law is part of the conditions Sri Lanka must meet to proceed with a £2.3 billion IMF program following a severe economic crisis caused by a significant decline in foreign exchange reserves.
Gunawardana emphasized the necessity of this law, stating, “There is a dire need for this law.” Sri Lanka, amidst restructuring approximately £9.5 billion in foreign debt with bondholders after a default in May 2022, is currently at a crucial stage in the debt restructuring process. “Sri Lanka’s economy is stabilizing but it will only be really stable after we complete the debt restructuring process,” Gunawardana told reporters.
The Proceeds of Crime Act (POCA) enables the judicial freezing and forfeiture of proceeds of crime and establishes a new authority to manage such seized assets. This legislation marks the first governance diagnostic undertaken by the IMF in Asia. Sri Lanka’s central bank has emphasized the importance of adhering to the Extended Fund Facility agreement with the IMF and completing the debt restructuring process.
Additionally, Sri Lanka’s economy is projected to grow by 3 per cent in 2024, marking positive growth for the first time in two years.
