The International Monetary Fund (IMF) is likely to release the US$ 168 million third tranche for Sri Lanka’s US$ 1.5 billion 3-year Extended Fund Facility (EFF) by mid-June, Finance Minister Ravi Karunanayake said.
Although the third tranche was scheduled to be released by April 20, belligerent Karunanayake said the development should not be described as a delay.
“It’s not a delay. It’s coming. There were some things of technical nature that were there and it is being looked at some time in June,” he said.
Karunanayake noted that these technical aspects include the modernization of the Inland Revenue Act and other legislation, although the government was looking at them from a different approach.
The minister this week returned to Sri Lanka from Washington D.C. after taking part in the G24 Finance Ministers meetings and the semi-annual World Bank/IMF meetings.
He said that the IMF was attempting to make matters “difficult” for Sri Lanka as a part of continuing the EFF.
“Our duty is to provide the largest benefit to our citizens. They (IMF) are putting pressure and giving us their ideas. We are determined and we want to protect our citizens. So we expressed our views aggressively. That’s the only thing the Prime Minister and President advised me to do,” Karunanayake said.
“IMF gives petty cash and tries to get the maximum out, but we respect them for one thing. They have helped us to show that we are financially well run. That is the only dividend that we get. We don’t want the petty cash,” he added.
He said he had told the IMF to either agree to Sri Lanka’s terms or to cancel the current arrangement.
“We said if we can’t have it on our terms, if it can’t benefit our country, we don’t want it. I am pleased to say that they have accepted that and that there have been improvements in the situation here. So on their meeting on June 14, everything that is supposed to get approved will be approved,” he said.
He further added that both IMF and the World Bank had acknowledged the improvements in Sri Lanka’s fiscal policy, but had called for further improvements in Sri Lanka’s monetary policy.
Sri Lanka had met most of the required indicators during the review of the second tranche of the EFF, except for net foreign reserves.
The EFF, which is tied to a host of reforms, includes opportunities for additional funding worth US$ 650 million, which are being undertaken by other multilateral agencies in exchange for further reforms.
The Central Bank this week said Sri Lanka requires major reforms to enter a trajectory of sustainable high growth.