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v2025

Sri Lanka expresses unwillingness to proceed with USD 800 million IMF facility

Sri Lanka reiterates its unwillingness to avail itself of the International Monetary Fund’s (IMF) Rapid Credit Facility of USD 800 million introduced to help countries deal with the fallout from the COVID-19 pandemic.

CBSL Governor W.D. Lakshman noted today (18) that the government’s policy was to ensure economic stability by taking sustainable foreign financing measures and increased non debt foreign exchange inflows into the country.

This strategy is quite out of way from the intervention approach of international financial agencies, he said.

He stated that the policy of not pursuing foreign debt-creating public investments will make government debt more manageable.

Sri Lanka is set to move away from an import-oriented market economy towards a production-oriented strategy despite a multitude of economic issues including the COVID-19 pandemic.

The IMF says it stands ready to discuss all options of engagement with Sri Lanka, including financial support, if requested by the authorities.

The preconditions for financial support are the same as for any other member, Masahiro Nozaki, IMF mission chief disclosed recently.

In April 2020, IMF received a request from the Sri Lankan authorities for emergency financial support under the Rapid Financing Instrument (RFI).

Assessing relevant conditions for the RFI has taken longer than for other countries, due to Sri Lanka’s daunting economic challenges, high public debt, and Parliamentary elections in August. The RFI request remains in place, Mr. Nozaki pointed out.

“We have sought but not reached understanding yet on how to fulfill key requirements for the RFI, which include policies to continue ensuring debt sustainability," he said.

The authorities have a range of options to ensure debt sustainability and the IMF stands ready to discuss all options with the authorities, he assured.

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