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Govt. reverses stance on IMF loan

11 February 2012 05:20 am - 13     - {{hitsCtrl.values.hits}}

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Despite the Central Bank’s previous announcement that the US$2.6 billion Standby Arrangement with the International Monetary Fund (IMF) would be terminated, the government has said it hoped to sign a new Letter of Intent next month to obtain the balance US$800 million.

Senior Minister Sarath Amunugama, who is in charge of International Monetary Cooperation told Parliament on Thursday the government, had not terminated this loan facility with the IMF, though Central Bank Governor Ajith Nivaard Cabraal had earlier said the deal would be terminated because the government was confident of sustaining its economy without further IMF assistance.

On June 24, 2009, the IMF Executive Board approved a SDR 1.65 billion (about US$2.6 billion) 20-month Stand-By Arrangement with Sri Lanka to support the country's economic reform programme.

The key objectives of the IMF-funded economic reform programme was to strengthen Sri Lanka’s fiscal standing while ensuring the availability of resources for a much needed post-conflict reconstruction and relief efforts.

Sri Lanka had received US$1.8 billion of the loan facility in seven tranches. Last month, an IMF delegation arrived in the country to review the country’s fiscal situation. After the review meeting, Mr. Cabraal told the media that the country would be compelled to pay an interest of 3.1 per cent if the balance US$800 million was drawn, and therefore the government would not go ahead with it.

Dr. Amunugama said the government continued to maintain a healthy relationship with the IMF on this matter.

“We have not deviated from the process of securing the entire amount of the loan. If we are to get the remaining amount, we will have to sign a separate Letter of Intent in March,” he said and added that the government would take a decision based on our foreign reserves.

United National Party (UNP) parliamentarian and economist Harsha de Silva said the government devalued the rupee and reduced the budget deficit by increasing taxes only to fulfill the conditions laid down by the IMF for issuing this loan. The IMF had also asked the government to improve the financial standings of the Ceylon Petroleum Corporation and the Ceylon Electricity Board and maintain them at least at break-even levels, but this is yet to be achieved. (Kelum Bandara)
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  Comments - 13

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  • Niroshan Saturday, 11 February 2012 05:13 AM

    What kind of government is this. They don't know if they are walking , standing or sitting. Change the Finance Minister immediately.

    Nodrog Sunday, 12 February 2012 04:21 AM

    We just pawned our grandchildren and great-grandchildren to the IMF.

    Patriot Saturday, 11 February 2012 05:28 AM

    Another nine generation has to bear the burden of repayment of this sin. Is there any hope of peace in Sri Lanka

    Roger Herath Saturday, 11 February 2012 05:29 AM

    Have you seen what this Govt policies did to CSE ( stock market). It wiped out significantly. Who cares about country and rule of law any more ?

    Stock market shows how irate this Govt economic policies are. Not to mention 2.7B defending rupee.

    Its under UNP we can expect some sanity to markets.

    kaputakukula Saturday, 11 February 2012 05:44 AM

    Don't this Cabral learn the SIGNS? Does not he got a working brain? This government puts every Sri Lankan into damn SHAME.

    Shaq Sunday, 12 February 2012 06:15 AM

    Where r the voters for this government? Why quiet? Cat caught your tongues??

    silva Saturday, 11 February 2012 06:50 AM

    who cares about ordinary people, as long as crooks travel around world it is ok poor srilankan.

    madduma Sunday, 12 February 2012 06:56 AM

    With Ceremonial Finance Minister, what did you expect ?

    Try invest in stock market ?

    !!! ha ha !

    ase Saturday, 11 February 2012 07:14 AM

    here we go again, how can we trust this govt. ?? then they do not know what they are doing.

    Lanka Saturday, 11 February 2012 07:33 AM

    we are in debt up to our necks and keep on going deeper by the day.

    concerned citizen Saturday, 11 February 2012 07:35 AM

    now we all can go down the hill together..

    Sagarika Saturday, 11 February 2012 08:17 AM

    As usual playing to the gallery! and then bite the dust!

    aruna Saturday, 11 February 2012 12:13 PM

    this is the reality without IMF loan we cant sevive no one can help us as well as our friends are defeating day buy day


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