IMF to continue funding Sri Lanka economy
The International Monetary Fund (IMF) said on Monday it would hold discussions with local authorities to enhance its support following the conclusion of the “relatively successful” Stand-by Arrangement (SBA) with Sri Lanka. Addressing the media at the Central Bank in Colombo, the IMF Resident Representative Koshy Mathai said the conclusion of the SBA with Sri Lanka has led to the authorities taking flexible measures for adjustments in policies that would hold the country in good stead and remained optimistic of the nation’s long term growth.
Without setting out dates, he said a team from Washington would hold discussions with authorities during annual meeting on the future of their programme with the IMF. Preliminary discussions already held between local authorities and the IMF have looked at the possibility of engaging the former in the Extended Fund Facility (EFF).
Under this programme the IMF would look to address the country’s serious medium term balance of payment problems due to structural weaknesses that would take a longer period of engagement and repayment. Sri Lanka is seeking a $500 million new facility from the IMF.
Meanwhile, Mr. Mathai observed that due to the commitment on the part of the authorities towards a flexible policy framework it had helped for exchange rate correction.
Overtime the Sri Lankan market is expected to develop but he pointed out that while “speculation is a normal part of market functioning, market manipulation is bad.” After a “relatively successful” programme with Sri Lanka, the IMF expects to engage in a “higher level of arrangement” towards building up reserves, fiscal deficit and ensuring the government gives space to reforms, he said.
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