The International Monetary Fund on Friday approved a final disbursement of $415 million to Sri Lanka and said its economy has been set on a more sustainable footing by its government's tough new monetary and fiscal policies.
The global lender approved the last tranche of a $2.6 billion loan to Sri Lanka during a board meeting in Washington and said a follow-up loan program would help support the government's policy plans.
"The right policies have been implemented and the fundamentals of the economy have been set on a more sustainable footing," Koshy Mathai, Sri Lanka's IMF resident representative told a forum in Colombo late on Thursday.
He said the new policy measures had minimised unforeseen future shocks to the $59 billion economy.
"Good times are here in the sense that we can see a future of more sustainable growth, more sustainable progress for the country without any fear that there are going to be problems cropping up underneath."
Sri Lanka has implemented tough monetary and fiscal policies early this year mainly to avert a balance-of-payments crisis by reducing its trade deficit.
Since February, the central bank has raised policy rates twice to more than two-and-a-half year highs, allowed flexibility in the rupee currency, and limited bank credit to make imports expensive. The rupee has depreciated more than 16 percent since November.
The government also raised fuel prices and taxes on many imports, pushing up the prices of local goods and services.
"We now have an economy that is underpinned by good policy fundamentals, we now have the commitment by the central bank and the government to run policies in a flexible way," Mathai said.
"These are all shock absorbers for the economy. And when we are hit by shocks from the outside world...especially at these uncertain global times, it's useful to have policy flexibility so that we can respond."
The tough policy measures drove year-on-year inflation to a 41-month high of 9.3 percent last month, trimming the IMF's growth forecast to 6.75 percent from its earlier estimate of 7.5 percent.
However, Mathai said, the inflation spike was not a concern.(Reuters)
"I don't want to get too troubled on that, because we see it as more of an increase in the price level rather than an increase in inflationary momentum (that) is going to continue month after month."(Reuters)
Hurray! Did I not always say we can get around the IMF fellows somehow? Now more money for Benz cars and foreign trips and tamashas with cute Indian actresses.
senavi Saturday, 21 July 2012 02:57 PM
Snooze is tightening. Here comes the "international community" with diaspora demand. After war victory, Sirima's 1970s nationalistic economy would have been the ideal solution until things settle down
senavi Saturday, 21 July 2012 01:47 PM
more Swiis bank accounts?
Jamis Banda Saturday, 21 July 2012 08:38 AM
You must also calculate 10% of the total amount.That is Rs.34.5 billion. You think what I think !!! Ha !!! Ha !!!
Loan Giver Saturday, 21 July 2012 07:02 AM
IMF is full of money and no other countries take loans because they can't repay due to the crises.
bandara Saturday, 21 July 2012 06:30 AM
abdulla, you better take a short course in economics before commenting on subjects that you are unfamiliar with. Borrowing more money is no way to development. The kind of mega infrastructure projects should be undertaken only if the country can sustain it on its own. Borrowing ( not aid or grant) is only a burden on future generations and is sure receipe for inflation. As to your question on why can't ask local banks to invest, first of it is not any banks business to invest on projects, that is the duty of teh govt., secondly the local banks do not have that kind of money. For all that to happen locally and be sustainable SL's need to work hars and our politicos to stop plundering the national wealth and stop wasting.
Grade two maths Saturday, 21 July 2012 06:12 AM
So simple.. 2.6 billion US dollars count to 345 billion rupees with current rates.. That when divided by 20 million makes 17250.. So the whole sri lanka owes each Rs. 17250 more now.. Three quarter of a normal salary gone for debt.. Wonder of the whole universe..
rehan Saturday, 21 July 2012 05:29 AM
oheppalayang..............................rata savari coming up
cp Saturday, 21 July 2012 04:32 AM
Hi everyone lets tighten our belts
Nodrog Saturday, 21 July 2012 04:37 AM
Where is the man who was going to pull the plug?
deva Saturday, 21 July 2012 04:05 AM
USD to LKR will be above 200.
Mims Saturday, 21 July 2012 01:56 AM
So there will be happy politicians anticipating their pockets being filled up, and they will say a grateful thank you to the" evil western powers" who made this possible.
Kondebendapucheena Saturday, 21 July 2012 03:55 AM
We are going to be rich with loan after loans
abdulla Saturday, 21 July 2012 03:33 AM
We need more money, we need more Highways, More sports complexes, More Hotels, Electric railway lines, more airports etc. for our future. government is in the right path, get more credit and invest. Why can't ask our local Banks to invest in bigger infrastructure projects rather getting credit from outside.
Nodrog Saturday, 21 July 2012 02:55 AM
Even though the country owes so much which future unborn generations will have to pay back our political leaders still squander the country's money as if it were going out of style.
Man B Saturday, 21 July 2012 02:38 AM
why IMF take care our country so much?
Cobra Saturday, 21 July 2012 02:25 AM
Budu Amme, mung monavada me salli walin koranne? Sudu ali thamai. Janayata hulang!!!
CHANDRAPALA Saturday, 21 July 2012 02:10 AM
In spite of the warning of the International rating agencies the IMF grants more loans without monitoring that they are being properly used by the government. They does not concern about the HR violations, Bribery and corruptions, transparency and good governance policy, The country has already fallen in to a debt trap.
balu Saturday, 21 July 2012 02:16 AM
INSANE...................THIS GOVERNMENT HAS TO GO MORE MONEY FOR ANOTHER COMMON WEALTH BID FOR NAMAL
Cobra Saturday, 21 July 2012 02:12 AM
People, brace yourselves for more price hikes after the elections and I mean not just upping the gas again!
balu Saturday, 21 July 2012 02:05 AM
MORE LOANS.. OUR FUTURE GENERATIONS WILL BE IN SO MUCH DEBT WHILE RAJA GENERATIONS MAKING BILLIONS
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