Govt. hard-pressed between disaster response and IMF programme

The government is encountering difficulties in funding its disaster response amid tight fiscal constraints, since the IMF stresses that spending must comply with the Public Finance Management Act (PFMA), Daily Mirror learns.

In its latest statement, the International Monetary Fund (IMF) emphasised the importance of transparent, well-prioritised expenditure in disaster recovery, as otherwise it could undermine hard-won gains in fiscal discipline under the ongoing reform programme.

“As Sri Lanka starts rebuilding, the authorities are committed to safeguard the gains that were achieved on fiscal and debt sustainability, strengthen public investment management, including project reprioritisation and implementation, and ensure spending is executed transparently and in compliance with the Public Financial Management Act. They are determined to continue strengthening social safety nets to protect the poor and vulnerable, who are disproportionately affected by the cyclone," IMF Mission Chief Evan Papageorgiou said after the recent visit.

However, the IMF has assured the fullest cooperation in rebuilding. Meanwhile, the government's efforts for an international donor conference have not yet yielded.

Asked for a comment, leading Economist Prof. Rohan Samarajeewa said that the cyclone poses difficult choices between debt sustainability and disaster response.

The massive infrastructure damage must be repaired quickly if the economy is not to stall. The approved supplementary estimate included Rs. 250 billion for infrastructure restoration. While the World Bank/GFDRR-supported Global Rapid Post-Disaster Damage Estimation is not yet available, it is unlikely that this sum will be enough to build back better, for example, to not just rebuild roads but also support the slopes to prevent repetition of landslides and road damage, he said in a written response.

(Source - DailyMirror)