IMF delays Sri Lanka's loan discussion on political crisis

21 November 2018 08:31 am - 10     - {{hitsCtrl.values.hits}}

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The International Monetary Fund (IMF) said on Tuesday it had delayed discussions on Sri Lanka’s next loan tranche due to the country’s political crisis.

The IMF has disbursed over $1 billion out of a $1.5 billion three-year extended fund facility (EFF) loan it agreed in 2016. The aim was to avert a financial crisis and support the economic reform agenda of the government then in power.

That government was sacked on Oct. 26 by President Maithripala Sirisena due to differences with former prime minister Ranil Wickremesinghe, who was backing social market economic policies.

Since the removal of Wickremesinghe, Sirisena has dissolved the parliament and called for a fresh election, but the Supreme Court last week ordered a suspension of that decree until it had heard petitions challenging the move as unconstitutional.

In September, the IMF said its mission had made significant progress towards “reaching a staff-level agreement with the government on completing the fifth review of the EFF and discussions will continue during the annual meetings of the IMF and World Bank in October”.

On Tuesday an IMF spokesman told Reuters via email: “We are monitoring the situation and remain in close contact with our technical counterparts in Sri Lanka.”

“Program discussions on the 5th review of the IMF’s Extended Fund Facility are currently on hold, pending clarity on the political situation.”

After completion of the fifth review Sri Lanka would expect to receive a sixth tranche of about $250 million. The total loan was expected to have been disbursed with a seventh tranche by mid 2019.

The political crisis has hit the economy. Already the rupee currency has fallen about 1.8 percent since the crisis unfolded last month. On Monday, the rupee fell to a record low of 177.20 per dollar. Foreign investors have pulled out more than 30 billion rupees ($169.5 million) since the crisis unfolded on Oct. 26.

Moody’s also downgraded Sri Lanka on Tuesday for the first time since it started rating the country in 2010, blaming a political crisis for exacerbating already problematic finances. (Reuters)

  Comments - 10

  • Unchikun Wednesday, 21 November 2018 08:51 AM

    No issues. Our tuition master says. there are no issued in funds. No loans are needed for this illegal government.

    Sunil Wednesday, 21 November 2018 10:49 AM

    That's his 80's tuition classes topic.

    Lankan Wednesday, 21 November 2018 09:12 AM

    No issues. Our CBSL officers can manage the situation with the Tuition Master's guidance.

    Jack Wednesday, 21 November 2018 09:21 AM

    hmm. now see the impact.. It is going to effect the country and people.. not the politicians and crooks..

    wijebahu Wednesday, 21 November 2018 09:22 AM

    I dont think patriotic Mahinda, weerawansa and Gammanpilila want any western money. LOL. reject if you can you dumbos.

    voldy Wednesday, 21 November 2018 11:15 AM

    and then they beg for China's money

    harsha Wednesday, 21 November 2018 09:23 AM

    it seems the New Regime is blessed with Well Wishes and Good News from All over the World...and Best is yet to come...

    Santa Wednesday, 21 November 2018 01:44 PM

    SLPP waiting for Santa's arrival

    cheers Wednesday, 21 November 2018 09:54 AM

    IMF is a loan so its not free money under UNP we were down graded by the finance institutions under ranil and unp

    Marcian Chris Wednesday, 21 November 2018 10:37 AM

    Coming colour is not good. With unrepayable loans obtained from reputed foreign sources and enormous debt to China - will we get gobbled up by China like Tibet?


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