News
All clear for IMF bailout package
View(s):- First tranche by end March or early April after President’s talks with IMF chief
By Damith Wickremasekara
The Government is on the cusp of clinching a deal with the International Monetary Fund (IMF), senior officials said yesterday expecting a US dollars 300 million first tranche by the end of the month, or at least reaching a final agreement on its US$ 2.9 billion bailout agreement at the Fund’s Spring Session early next month.
Highly placed Finance Ministry sources told the Sunday Times yesterday that this followed a zoom meeting on Thursday night between President Ranil Wickremesinghe as Minister of Finance and the IMF’s Managing Director Kristalina Georgieva. The IMF head while stating that she realised the “pain” the Sri Lankan people were going through, it is learnt, commended the Sri Lankan Government for taking “bold steps” in moving forward towards an IMF programme soon.
Finance Ministry sources said the Government would be submitting a formal application by way of a Letter of Intent to the IMF Board of Directors listing out the reforms it had put in place for compliance with the IMF demands for the bailout. Earlier, President Wickremesinghe announced the Government had fulfilled the 15 requirements of the IMF.
A few adjustments had to be made during the week, the source said and pointed to the 100 Basis Points or ‘bp’ — a unit of measure for interest rates calculated for changes – rise in interest rates “because inflation was not falling fast enough”.
Meanwhile, Ms. Georgieva said China was also on board now on reaching an agreement with other creditors of Sri Lanka’s foreign loans.
The Finance Ministry source said yesterday that the most recent Chinese statement was “constructive” and Sri Lanka could now “move forward” and “go along” with formally submitting an application to the IMF “taking into account” the latest Chinese position.
According to a President’s Media Unit Friday night statement, the discussions between the President and the IMF Managing Director were significant as they followed a discussion the IMF head had with Chinese Prime Minister Li Keqiang.
It quoted a news report in Bloomberg News as saying that the Chinese premier expressed China’s willingness to participate in multilateral efforts aimed at “constructively contributing” to debt-ridden countries during the talks.
Talks with the IMF have been concluded after six months, a senior Treasury official confirmed yesterday. He said the country would benefit from the stringent measures taken to rectify deficiencies in fiscal reforms and Sri Lanka’s financial discipline would “open other opportunities for loans and aid” from other lending agencies and countries.
He pointed to the latest Central Bank figures showing the Rupee appreciating by 4.9 percent to the US dollar, 8 percent to the Japanese yen, 5.6 percent to the British Pound, 5.4 percent to Euro and 4.4 percent to the Indian rupee.
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