Two months after the International Monetary Fund (IMF) was due to grant the third tranche of the US$ 2.6 billion loan to Sri Lanka, a fund mission this week said that it was awaiting the conclusion of the Parliamentary elections in April and the subsequent budget to ‘decide’ on this disbursement but Central Bank (CB) officials are more than confident that it will get the IMF nod.
The IMF team meeting reporters. From left - Dr Shanaka Jayanath Peris, Dr Dan Nyberg, Dr Brian Aitken (Head of delegation),
Dr Koshy Mathai (Sri Lanka country representative) and Dr Lawrence Dwight. Pic by M.A. Pushpakumara. |
“We have met two of the targets as at the end of December in net international reserves and reserve money for net international reserves and reserve money. It is only the budget deficit target of 7% that we could not meet and by June, after the elections and post-budget the money will be approved,” a CB official told the Business Times. However, he added (without further comment):
“We also need some luck.” The IMF mission led by Dr. Brian Aitken said that it met with officials from the Central Bank, the Ministry of Finance and Planning, the Presidential tax Commission, and other government ministries and departments, as well as representatives of civil society and the private sector. “Overall economic conditions are improving as expected, and the economy is poised for a recovery this year. External balances are strong, remittance inflows continue at a high rate, tourism prospects are rapidly improving, and gross reserves remain at comfortable levels,” Dr. Aitken said.
He said that the third tranche of the standby facility would be deferred till after such assessments are made. “The government has exceeded the target for the budget deficit significantly. This is reflected in the domestic borrowings of the government to finance the budget deficit which has exceeded substantially from the target," Dr Aitken said.
He said that this mainly reflects faster-than-expected infrastructure project implementation (such as the Hambantota Port project), higher interest payments, and sluggish fourth-quarter revenue growth. “We are currently assessing the implications of this outturn for bringing the underlying budget deficit to a sustainable level,” he said. |
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