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Sri Lanka seeks another IMF bailout

21 July 2012 06:44 am - 11     - {{hitsCtrl.values.hits}}

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Sri Lanka announced the completion of a $2.6 billion IMF bailout, but it was seeking fresh loans to support an economy emerging from decades of ethnic war

The International Monetary Fund on Friday released the final instalment of the bailout agreed in July 2009, two months after Colombo defeated Tamil rebels in a major offensive to end the drawn-out conflict.

The drawing down the final instalment of the bailout package marked the longest engagement Sri Lanka has had with the IMF and the single largest facility from a multilateral institution, the Central Bank of Sri Lanka said.

"Sri Lankan authorities now look forward to the continued close engagement with the IMF and intend to discuss the possibility of financial support for its economic development agenda..." the bank said in a statement.

It did not say how much Sri Lanka hoped to secure from the IMF by way of fresh loans, but finance ministry sources said Colombo was looking at more than $500 million as a first step.

The original July 2009 IMF bailout was secured when the island's foreign reserves had dropped to a dangerously low level of $1 billion, or just sufficient to support a couple of week's imports.

Since then, Sri Lanka has built up reserves which could finance imports of up to three and a half months, according to the bank.

However, a $10 billion trade deficit at the end of last year caused the local currency to depreciate by about 18 percent this year.

Last week, Sri Lanka raised $1 billion through a bond issue that was over subscribed by a record 10.5 fold despite volatility in global markets, according to the central bank.

Sri Lanka's economy grew 8.3 percent last year, up from 8.0 percent in 2010, the first full year after government forces crushed the Tamil Tiger rebels.

However, the IMF has said it forecasts Sri Lanka's economy to grow at a slower rate this year.(AFP)

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  Comments - 11

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  • Calistus Jayatilleke Saturday, 21 July 2012 07:11 AM

    So, the PLUG is firmly fixed, whatever the super patriots have to say. This will definitely mean more depreciation for the rupee and more luxuries for the ministers and their hangers on.

    Minister Saturday, 21 July 2012 08:19 AM

    Yes, we appeal the IMF to grant this loan also, because the Ministers are now crying through their nose till their salaries are increased to stop their corruptions.

    Silverhawk Saturday, 21 July 2012 08:35 AM

    There goes the energy of future generation. unspeakable truth.

    abilin mama Saturday, 21 July 2012 09:14 AM

    We sort advice from our patriotic Minister Mr Weerawansa why Sri_lanka is hunting after west dominated IMF for credit. As well as i agree with Mr Navin Disanayake's genuine request to increase the salaries of Ministers to curb corruptions. Not only ministers increase all the other salaries of corrupted instutions like Police and regulate it properly.

    Sathis Jayaweera Saturday, 21 July 2012 09:20 AM

    Lala lala la la.... Lala lala la la.....Lala lala la la........

    Sujeewa Devarani Saturday, 21 July 2012 01:24 PM

    Good show! Now the Conga line will get longer and rowdier.

    senavi Saturday, 21 July 2012 03:08 PM

    How many dollars have been earned through this mega projects so far?. The unproductive people using dollars earned by housemaids drive on the highways in their duty free cars

    ceylon Saturday, 21 July 2012 03:02 PM

    SL lives on loans and more loan and in return SL says it should not bow down to any countries.

    warra02 Sunday, 22 July 2012 05:09 AM

    the word bailout means the economy is on the verge of collapse. the reason why the FOREX in the country has run dry is because of the unnecessary government expenditure and imports. the only way to reverse this problem is for the government to stimulate the economy by implementing local projects. for example if it costs $20 million to import a power set from India. they are better off utilizing it to start their own project to manufacture an indigenous train. with the local skills we have got. or similar small projects.

    CJ Monday, 23 July 2012 05:53 AM

    Who shares the 30 million $ commission .....? from the billion dollar bond issue

    Rahul Jayanth Monday, 23 July 2012 11:44 AM

    On one condition! The country should have a compitent Indipendent Finance Minister.


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