Hard days ahead for Sri Lankans to rejoice under IMF programme
The International Monetary Fund (IMF) has prescribed some bitter medicine for Sri Lanka’s economic ailment making it very difficult to the government to swallow as it has to abide by 48 commitments during a 48-month period.
The IMF Board approved a 48-month extended arrangement under the Extended Fund Facility (EFF) of SDR 2.286 billion (about US$3 billion) to support Sri Lanka’s economic policies and reforms.
The aims of the EFF-supported programme are to restore macroeconomic stability and debt sustainability, safeguarding financial stability, and stepping up structural reforms to unlock Sri Lanka’s growth potential, Senior Research Analyst at Verite Research Sureni Weerathunga told the Business Times.
She also served as the Former Research Analyst- International Monetary Fund (IMF), Washington DC. The government is to fulfill these difficult tasks agreed upon with the IMF and it should protect the most vulnerable while improving governance as it has extended the begging bowl to the IMF 16 times and not completed it on nine occasions, she pointed out.
However it has completed nine prior actions including the implementation of fuel and electricity formulas using automation, enhancing state revenue and budgetary adjustments for the year interim budget 2022 accordance with IMF perimeters, Finance Ministry sources said.
Around 33 per cent of the balance 39 structural adjustment targets have also been achieved but there is a long way to go under the strict monitoring and reviews of the IMF mission once in every six months during the 4-year period.
Sri Lanka is probably the first country to light fire crackers for receiving a loan from the International Monetary Fund (IMF), Prof: Aminda Methsisla Perera said adding that actually the administrators of this country should be regretful for making the country bankrupt.
He said that it is compulsory for the government to implement structural reforms to address corruption vulnerabilities and enhance growth.
Sri Lanka’s successive governments have governed the country with IMF supported economic reform programmes but all those regimes have failed to put the economy on track due its lack of commitment in implementing the stipulated prescription of the monetary agency.
But this 17th time under the IMF supported economic reform programme has to be carried out to the letter otherwise the country will perish with the massive debt mount, a former Treasury Secretary said.
Notable measures have been taken to manage the economic challenges and start-up reforms, he pointed out adding that import restrictions and other balance of payment measures were tightened to alleviate foreign exchange (FX) shortages and depreciation pressure. A safety net is in place for the protection of vulnerable community displaying the government’s eagerness to adhere to the programme targets, he added.
Policy actions that are a key to tackling the root causes of the crisis and building confidence during the initial stabilisation phase, such as revenue measures and Central Bank autonomy, will have to be implemented upfront.
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