| An International Monetary Fund (IMF) mission led by Brian Aitken, Mission Chief for Sri Lanka of the IMF’s Asia and Pacific Department was in Jaffna yesterday for meetings with government officials, informed sources said.
The IMF team, visiting Jaffna for the first time under the current $2.6 billion Stand-by Arrangement (SBA) facility, met Northern Governor G.A. Chandrasiri and Jaffna Divisional Secretary S. Ganesh jointly. "The meeting went off well and government officials explained the development and rehabilitation work being done," one source said. The IMF team will be returning to Colombo this morning.
Though most government and Central Bank (CB) officials are downplaying the visit as a routine review mission, the sources, who declined to be named, said it was a crucial mission which would decide whether Sri Lanka is getting the next tranches of $320 million each.
CB Governor Ajith Nivard Cabraal is away in Washington to address investment-raising meetings but he was reached by telephone by the Sunday Times.
Asked to comment on the discussions, he said they were continuing smoothly and “the next tranches are likely to be released in June”.
Asked to comment on reports that Sri Lanka was considering issuing a new sovereign bond for up to $1 billion around July, to fund development and rebuilding, Mr Cabraal said: "We would consider financing options in the budget after July and a bond issue is in these options."
The low-interest SBA provides for the disbursement of around eight tranches of $320 million each since its approval in mid-2009.
Sri Lanka got two tranches but the IMF’s facility drew vigorous public debate in February after the Fund decided to delay the third tranche as the government had failed to meet its own budget deficit targets in 2009. An Aitken-led mission at that time told reporters in Colombo that they would return for another review after elections and a budget was presented.
However that schedule has now gone awry after the government said the budget presentation would be delayed to late June and that a presidential decree was being made to advance money from the Consolidated Fund for government spending from May to July. This process is likely to further aggravate budget deficit targets.
The delayed disbursement and re-scheduling of the budget led to speculation and public debate that the IMF may further suspend disbursements or that the government would call off the agreement as it had enough money in the foreign exchange reserves’ kitty.
The IMF’s Colombo Representative Koshy Mathai, asked to comment on the progress of meetings by the mission, said all such information would be provided at a media briefing on May 21. CB officials were also tight-lipped, as has been the case in the past during IMF review missions, on the meetings.
Deputy Finance Minister Sarath Amunugama, who along with Treasury Secretary P.B. Jayasundera, met the mission on May 12, told the Sunday Times that it was a positive meeting and that he was confident of the next tranche being released. The delegation is due to return to Washington after the May 21 news conference. |
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