Sri Lanka has dropped plans for a fresh bailout facility from the International Monetary Fund (IMF) but discussions are underway with the donor agency on technical assistance on public financial management, tax policy and administration.
"The Sri Lankan government has decided not to pursue a new or ongoing IMF programme, but to continue maintaining the close relationship with the Fund under standard consultation processes similar to many other member countries," Central Bank Governor Professor W. D. Lakshman said.
Addressing a media conference convened to brief journalists on the third monetary policy review of the year, he noted that a team of two IMF economists currently in Colombo are conducting annual Article 1V consultations with Sri Lankan authorities.
They will be assessing economic and financial developments and discuss the country's economic and financial policies with government and central bank officials.
The team reports its findings to IMF management and then presents them for discussion to the Executive Board, which represents all of the IMF's member countries.
A summary of the IMF Board’s views is subsequently transmitted to the country's government thereafter informed sources said.
However, according to State Minister of Finance Ajith Nivard Cabraal, Sri Lanka is eligible to receive up to USD 800 million to boost foreign reserves from the IMF as a part of a new allocation of Special Drawing Rights.
The International Monetary Fund (IMF) confirms it has received a request for emergency financial assistance from the Sri Lankan authorities to fight the COVID-19 pandemic.
This was stated by the Director of the Communications Department of the International Monetary Fund, Gerry Rice responding to questions during a press briefing recently.
We did receive a request from the Sri Lankan authorities for emergency financial support to help fight the COVID pandemic,” the IMF spokesman said.
He stated that the assessment of that support has taken longer than for other countries due to “Sri Lanka's daunting economic challenges and high public debt.”
Rice said they have sought, but not reached understanding, on how to fulfil the key requirements for what could be a rapid financing instrument which would include policies to continue ensuring debt sustainability to address the balance of payment challenges including from the COVID‑19 impact on tourism and to preserve international reserves.
“The USD 1.5 billion EFF arrangement approved in 2016 expired on June 2, 2020. Given that the final review under the arrangement was not completed, Sri Lanka could not avail of the last disbursement under the EFF, amounting to SDR 118.550 million which is equivalent to around USD 200 million. Disbursements under any Fund arrangement can only be made during the period between the date of its approval by the IMF Board and its expiration date," IMF mission chief Masahiro Nozaki said. Therefore at this point, for Sri Lanka to access any additional Fund resources, the IMF Board approval of a new arrangement would be needed, he disclosed.