IMF keeps options open for SL to seek support
The International Monetary Fund (IMF) is keeping options open for Sri Lanka to obtain financial assistance to overcome the foreign reserve depletion issue if the local fiscal and monetary authorities are willing to fulfil necessary requirements, IMF Mission Chief Masahiro Nozaki assured.
In response to an email request of Business Times for comments on the current status of IMF support to Sri Lanka, Mr. Nozaki noted that that they have not received a request for financial support from Sri Lanka recently, but stand ready to discuss options if requested.
The earlier request for emergency financial support (for COVID-19) under the Rapid Financing Instrument (RFI), made in April 2020, did not move forward, he said.
Staff level negotiations with local authorities did not reach understanding on how to fulfill key requirements for the RFI, which include policies to continue ensuring debt sustainability.
In the meantime Sri Lanka could get up to US$ 800 million worth reserves from the International Monetary Fund as a part of a new allocation of Special Drawing Rights, State Minister of Finance Ajith Nivard Cabraal told the Business Times.
A general Special Drawing Rights (SDR) allocation is a unique instrument that would benefit all IMF member countries Mr. Nozaki pointed out adding that SDR holdings are an unconditional reserve asset, and, hence, differs from IMF financing under Rapid Finance Instrument (RFI) or Extended Fund Facility EFF instruments.
Once approved by the IMF’s Board of Governors, the new SDR allocations will be distributed, unconditionally, to all members that participate in the SDR Department according to their quota shares, he disclosed.