SL not to pursue new IMF loan

12 February 2013 04:28 am - 17     - {{hitsCtrl.values.hits}}

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Sri Lanka has decided not to pursue a new loan from the International Monetary Fund as the global lender has indicated it may not be in a position to consider budget support to country, the central bank said on Tuesday.
 
The central bank said the IMF had indicated that Sri Lanka does not warrant unconventional and exceptional financial support in light of recent improvements in its fiscal situation.
 
"Sri Lankan authorities have decided not to pursue a new programme with the IMF, but to continue maintaining the close relationship with the Fund under standard consultation processes similar to many other member countries," the bank said.
 
The full statement
Since completion of the Stand-by-Arrangement successfully with the IMF in July 2012, the
Sri Lankan authorities and the IMF have been engaging in  a dialogue  on the future
relationship between Sri Lanka and the Fund. 
 
In the meantime,  Sri Lanka has moved to a more market oriented exchange rate
determination regime and the  country’s reserves have increased to a much higher level
when compared to the position at the beginning of the Stand-By Arrangement.  In fact, Sri
Lanka’s external reserves have now reached a level of approximately US$ 7 billion, from
just over US$ 1 billion in early 2009 when Sri Lanka  commenced the Stand-By
Arrangement with the IMF. Accordingly, there appears to be a very limited need to build
up a  further cushion in external reserves through traditional  IMF Balance of  Payment
support programmes, such as Stand-By Arrangements and Extended Fund Facilities. 
 
In that background, the Sri Lankan authorities had expressed their interest in a future IMF
programme, only if such programme entailed  support to finance the budget within the
announced fiscal consolidation process by which the Government has already committed
to bring down the fiscal deficit to 5.8 per cent of GDP in 2013 and below 5 per cent of GDP
in the medium term. 
 
However, during  consultations, the IMF has indicated that  the Fund may not be in a
position to consider any direct or indirect budget support to Sri Lanka, since the current
improved status of Sri Lanka does not warrant unconventional and exceptional financial
support to the Government of Sri Lanka from the IMF.  The IMF has also been of the view
that Sri Lanka has now developed well-established access to international capital markets
and therefore budget support, if necessary, could be conveniently accessed from such
market sources and hence there is no need to access the Fund for such budget financing. 
 
In view of above circumstances, Sri Lankan authorities have decided not to pursue a new
programme with the IMF, but to continue maintaining the close  relationship with the
Fund under standard consultation processes similar to many other member countries. 
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  Comments - 17

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  • padma Tuesday, 12 February 2013 06:45 AM

    This time IMF has requested a loan from sri lanka government.

    pasel Tuesday, 12 February 2013 06:49 AM

    here is the truth
    Sri Lanka drops IMF loan bid over spending dispute - FRANCE 24

    Sri Lanka on Tuesday dropped plans for a fresh $1.0-billion loan from the International Monetary Fund following disagreements over how the money should be spent, the central bank said

    matath onnae Wednesday, 13 February 2013 06:25 AM

    cabral can you also get me a 20 million USD loan? i need to invest for building a better vacation, Home and education for my children. Sri Lanka will pay for it after i die

    dumb Tuesday, 12 February 2013 07:02 AM

    Now cabral will twist it saying, the economy is doing so well that the IMF loan is not needed. Think the concerns raised by the opposition during the IMF meeting had impact on the IMF rejection of the loan.

    edward Tuesday, 12 February 2013 07:15 AM

    Govenment need money to fund the ministers so its only people will read this article and believe it

    malkanthi Tuesday, 12 February 2013 10:25 AM

    The future generation also will keep borrowing to pay the interest.

    vijay Tuesday, 12 February 2013 10:27 AM

    The chickens come home to roost or sour grapes

    Kokila Tuesday, 12 February 2013 07:34 AM

    CB head's statements are not trustable. Tomorrow he will say it will ask another loan.

    Kondebendapucheena Tuesday, 12 February 2013 07:38 AM

    Future 3 generations need to pay back what we have already obtained.

    yoga Tuesday, 12 February 2013 12:00 AM

    sour grapes via DM Android App

    Thomas Tuesday, 12 February 2013 08:23 AM

    IMF loan need to upkeep the Jumbo Cabinet, turned down by IMF. Cabrral on the wrong side.

    perumal Tuesday, 12 February 2013 08:53 AM

    To me it seems screws are tightening all round.

    Sanjay Fernando Tuesday, 12 February 2013 05:32 AM

    SO basically the IMF refused to give us a loan

    Calistus Jayatilleke Tuesday, 12 February 2013 05:42 AM

    UNPLUGGED, at last !

    ab Tuesday, 12 February 2013 12:00 AM

    Enough is enough. Its better not to take loans wish conditions via DM Android App

    R.Dias Tuesday, 12 February 2013 05:55 AM

    hik..hik..hik...sour grapes..

    Arjuna Tuesday, 12 February 2013 06:42 AM

    Difficult to believe last time also. 1st refused after 2 weeks accepted.


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