IMF looks at best options for Sri Lanka to ease the Balance Of Payment pressure
The International Monetary Fund (IMF) is looking at best options that might assist Sri Lanka to ease the Balance Of Payment (BOP) pressure, with signs of debt crisis also emerging in an economic twist not seen in the past. Replying online at the IMF regular press briefing to questions posted via an e-mail by the Business Times, IMF spokesman, Gerry Rice said “In terms of the IMF thinking, our staff is looking at what might be the best options based on our assessment of the macroeconomic vulnerabilities facing Sri Lanka, the nature and size of balance of payments’ needs, and the proposed government policies to address these issues”.
He noted that the Sri Lankan authorities have expressed interest in a Fund supported programme as one option to address the balance of payments pressure that they are facing, but again, there has been no formal request for a programme.Mr. Rice reiterated that IMF staff has concerns with the proposed 2016 budget, which does not envision significant consolidation relative to the expected outcome for 2015.Prime Minister Ranil Wickremesinghe told parliament this week that Siri Lanka will seek a bailout from the IMF next year as global economic conditions are set to be unstable. Participating in the second reading stage debate on 2016 budget, he said other than the US, global growth was slowing and there was a possibility of ISIS rebels creating greater instability in the Middle East, which would affect Sri Lanka.
The Prime Minister revealed that he had instructed Finance Minister Ravi Karunanayake to work out a stand-by-arrangement with the IMF.
But the IMF says that Sri Lanka is yet to make a formal request for a bail-out package even though state authorities have spoken of fund support.
According to Treasury sources, Sri Lanka still owes the IMF 200 per cent of its quota for the previous standby agreement and the country right now is not in a comfortable position.The Central Bank noted that trade deficit widened during the first nine months of the year by 3.8 per cent to US$ 6,145 million, driven by the continued increase in non-oil imports.However, Gross official reserves, which stood at US $ 6.8 billion at end September 2015, are estimated to have strengthened to around US$ 8.0 billion by November 03 with the receipts from the ninth International Bond issuance for US$ 1.5 billion. Meanwhile, the Sri Lanka rupee has depreciated by 8.1 per cent against the dollar so far in 2015.