IMF approves US$ 427mn for SL

3 April 2012 12:55 am - 20     - {{hitsCtrl.values.hits}}

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The International Monetary Fund on Monday approved a $427 million loan for Sri Lanka, hoping to shore up government coffers that have been ravaged by a massive trade deficit.

The Washington-based lender said that Sri Lanka's economic recovery continued in 2011, but easy access to credit and a rigid exchange rate had helped extend long-running trade imbalances.

Last year's trade deficit hit nearly $10 billion, or a fifth of the country's GDP, imposing a massive strain on the country's dwindling foreign reserves and leaving the island exposed to external shocks.

Since 2009 the IMF has lent Sri Lanka $2.13 billion in an effort to reform the country's economy and improve the government's budget in the wake of a four decades-long ethic war.

The country's foreign currency reserves have been decimated, leaving little cash on hand for a government that is also running a high budget deficit.

"The authorities have recently introduced a broad package of measures," noted the IMF's Min Zhu.

The government has allowed the rupee to depreciate and slapped credit ceilings on commercial banks to discourage loans that could fuel further imports.

The country needs to borrow heavily to finance the trade deficit and repay debt which could push the country into a vicious debt cycle, experts warn. The government has insisted, however, that it does not risk a sovereign default. (AFP)

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  Comments - 20

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  • Uditha Madumal Tuesday, 03 April 2012 06:07 AM

    Thanka a lot IMF

    prado Tuesday, 03 April 2012 06:27 AM

    Goodeeeee!!!!!
    $10Mn for new sports bid
    $100Mn for a tower
    $100Mn for a road to take my ferrari for a ride
    ah there's plenty left for a new testing power plant

    Ravi Tuesday, 03 April 2012 11:52 AM

    Not exactly but they have a big say on IMF and world bank.

    Black Mamba Tuesday, 03 April 2012 01:52 AM

    So that explains the rush to increase prices of fags, vehicles and liquor - all non-essentials but wait there's more:- the essentials will get hit after the New Year, mark my words. Gas, fuel(again), water, milk powder and even the coconut is going to get a mega hit!

    Sumathipala Tuesday, 03 April 2012 01:25 AM

    If the government proudly announces that it will not bow down from the west, this loan should be definitely refused. These are double standards to hold patriotic and anti-white speeches to the masses and on the other hand keep the begging bowl.

    Samosa Tuesday, 03 April 2012 02:15 AM

    hit our stomachs and finally we got it. Yet it is another loan. Where are we heading with too much debt.

    Punchi Putha Tuesday, 03 April 2012 02:06 AM

    Where is the Anti US Weeraya? ask him to ban the IMF loan as well?

    Jothipala Tuesday, 03 April 2012 02:17 AM

    This is aloan from IMF. Not a donation.

    Calistus Jayatilleke Tuesday, 03 April 2012 02:36 AM

    Wonder what would have to say about this surrender of the government to IMF demands to get the last tranche of the IMF loan. Previously, we have heard the Central Bank Governor saying the country does not need this loan at all and others like Minister Weerawansa exhorting everyone to boycott US goods and demanding that the "plug be removed". Double standards, indeed.

    shantha madawela Tuesday, 03 April 2012 08:20 AM

    why don't we celebrate another massive deyata kirula show for that money...

    buffaloa citizen Tuesday, 03 April 2012 03:19 AM

    Yes and the loan comes with stringent conditions which this regime has boasted will not bow down and now the reverse is happening.

    C.K. Lankaputhra Wednesday, 04 April 2012 01:54 AM

    How much will go for our benefit, 0.001 %, .0.002 or what?

    Ramakumar Tuesday, 03 April 2012 03:53 AM

    what about our idea to give loan to Europe and other countries?

    How much we allocated to give loan to others?.

    ElavaluSambol Wednesday, 04 April 2012 04:55 PM

    Callie, is there anything wrong in obtaining an IMF loan ? Looks like you expect the government to borrow money from your nandamma to develop the country.

    Fusion Tuesday, 03 April 2012 02:30 PM

    What else did you expect from SL Govt? Honest, straight forward politics?

    Bigfoot Tuesday, 03 April 2012 04:27 AM

    Loans and more loans. This will be followed by more increase in taxes and reduction of state welfare for the needy. It would be nice to know and to what this loan is being utilized for. Making Colombo beautiful?

    Randika Rathnayake Tuesday, 03 April 2012 09:54 AM

    We need your continuous support as ever developing country.

    Concerned Tuesday, 03 April 2012 10:51 AM

    Is IMF American?


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