First in Asia: With the IMF nod, Sri Lankan law to seize proceeds from crime
Virendra Pandit
New Delhi: Limping back to normalcy after the 2022 socio-political-economic upheaval, a cautious Sri Lanka has approved a new law backed by the International Monetary Fund (IMF), allowing the state to seize any proceeds from criminal activities.
The Proceeds Of Crime Act (POCA) was proposed as part of efforts under the IMF program to improve governance, Transport Minister Bandula Gunawardana, Cabinet spokesperson, said on Friday, the media reported.
The law is part of the conditions Sri Lanka has to fulfill to take forward a USD 2.9 billion program with the IMF after its economy crumbled under the worst financial crisis since 1949, caused by a severe fall in foreign exchange reserves due to the collapse of its chief bread earner, the tourism sector, in the wake of the COVID-19 pandemic.
The island nation is also restructuring about USD 12 billion in foreign debt with bondholders after defaulting in May 2022.
“There is a dire need for this law,” Gunawardana told reporters.
“Sri Lanka’s economy is stabilizing but it will only be stable after we complete the debt restructuring process, which is at a crucial stage now. We must continue down this path.”
The POCA will allow for the judicial freezing and forfeiture of proceeds of crime and establish a new authority to manage such seized assets.
The governance diagnostic under the IMF program is the first undertaken by the global lender in Asia.
Sri Lanka’s central bank said on Thursday that it is paramount that the country stick to its Extended Fund Facility agreement with the IMF and complete its debt restructuring process.
The island nation’s economy is projected to grow 3 percent in 2024, recording positive growth for the first time in two years.
