CB lends Rs 90 bn to Govt. to settle loans
View(s):The Central Bank (CB) has subscribed to Treasury bills (T-bills) amounting to Rs. 90 billion so far this month (January) at the request of the Treasury to assist financing needs of the government, it was announced on Thursday.
The CB said this was due to the delay in receiving expected foreign currency financing arrangements as envisaged in the Treasury’s cash flow for the month of January.
“The Monetary Board has acceded to the Treasury’s request in the national interest and under exceptional circumstances. Having reviewed the macroeconomic consequences of subscribing to T-bills by the CB, the Government has agreed to reverse part of the transaction in February and the balance during the first quarter of 2019 once the Government’s borrowing programme is brought back on track with realisation of expected financial arrangements,” the CB statement said.
On Tuesday, non-Cabinet Minister of Economic Reforms and Public Distribution Minister Harsha de Silva was quoted in the local media as saying that the government had on January 15 settled the US$1 billion borrowed by the previous regime in January, 2014 by way of international sovereign bonds.
Meanwhile the International Monetary Fund(IMF) has decided to resume the 3-year US$1.5 billion Extended Fund Facility Programme discussions from February 16. It will then release the sixth tranche of about SDR 177.77 or $250 million which was suspended as a result of the political impasse instigated by the President on October 26.
The IMF has decided to resume discussions on a funding programme with Sri Lanka soon, said Christine Lagarde, Managing Director of the International Monetary Fund (IMF), when she met with Finance Minister Mangala Samaraweera and Central Bank Governor Indrajit Coomaraswamy in Washington on Tuesday.
The IMF Communication Department quoted Ms. Lagarde as saying “The IMF remains ready to support the Sri Lankan authorities in these endeavours and an IMF team is scheduled to visit Colombo in mid-February to resume programme discussions.”
Sri Lanka’s unexpected change in government, political instability and policy paralysis compelled the IMF to delay the release of the sixth tranche of EFF.
The suspension of the sixth tranche came soon after the sudden change in Government on October 26 at a time where the Executive Board of the IMF was due to complete the fourth review of Sri Lanka ’s three-year EFF following the conclusion of its annual meetings in October. It was scheduled to be released in December this year.
Ms. Lagarde noted that she met with Minister Samaraweera and Governor Coomaraswamy and discussed the challenging economic environment and the policy priorities for the country.
“The government authorities stressed Sri Lanka’s continued commitment to their economic reform agenda under the IMF-supported programme,” Ms. Lagarde said following the meeting.
Ms. Lagarde said they agreed that a strong policy mix, with effective implementation of that agenda, is key to strengthening confidence, while putting Sri Lanka on a sustainable, high-quality growth path that would benefit its people.