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Sri Lanka hopeful of IMF bailout facility within two weeks
Sri Lanka is hopeful of receiving the International Monetary Fund’s economic bailout facility within the next two weeks following ongoing talks between a high-powered Sri Lankan delegation and IMF officials in Washington DC, Finance Minister Ravi Karunanayake said.
He told the Sunday Times he was highly optimistic on the outcome of the talks and Sri Lanka would get the necessary financial assistance of around US$ 1 billion to US$ 2 billion from the IMF to sail over the current economic tide.
Minister Karunanayake, in Washington for annual IMF/World Bank meetings along with Central Bank Governor Arjuna Mahendran and other senior officials, noted that the 36-month Extended Fund Facility (EFF) would have no strings attached. But the Government would have to make some commitments towards achieving medium-term growth and reserve objectives, in addition to building greater resilience to external shocks and improving revenue administration and tax policy.
The programme discussions were being conducted on the sidelines of the Spring Meetings of the IMF and World Bank, with the objective of concluding a staff-level agreement with the authorities, subject to approval by the IMF Management and the Executive Board in the next two weeks. An IMF team was in Colombo from March 31 to April 11 to hold consultations on the Government’s request for an IMF -supported arrangement.
Treasury Secretary R H S Samaratunga told the Sunday Times that these talks were continuing in Washington as there were several matters that needed to be finalised with the IMF before reaching agreement. The facility would be subjected to approval by the IMF management and its Executive Board soon, he said adding that Sri Lanka needed this assistance urgently as the country’s external financial situation was weak.
He disclosed that the IMF team was of the view that further measures were needed to increase the efficiency of trade facilitation, remove barriers to foreign investment entry and establishment, enhance access to finance, and strengthen financial market infrastructure.
The IMF mission welcomed the recent tightening of monetary policy, given the steady increase in core inflation and high private credit growth. It also recommended that the Central Bank should take active steps to rebuild non-borrowed reserve buffers.
(Please also see the [olitical commentary on Pages 14 and 15, and Business Times on earlier reports of Colombo discussions between the IMF and the government continuing in Washington)