Cabinet holds extensive discussions on possible IMF programme

17 November 2021 09:30 am

The Cabinet of Ministers had held extensive discussions on the pros and cons of seeking International Monetary Fund (IMF) assistance amid a worsening foreign exchange crisis, which has resulted in difficulties in importing fuel, cooking gas and other essential items. 

“We had an intensive discussion in reaching out to the IMF at this week’s Cabinet meeting. We debated the pros and cons of this, however, we haven’t reached any final decision,” the Co-Cabinet Spokesman and Minister of Energy Udaya Gammanpila told the weekly Cabinet Media Briefing held in Colombo yesterday.

By end of last month, the country’s foreign exchange reserves dipped to US$ 2.27 billion from US$ 2.7 billion in September.

Gammanpila noted that the government has been looking at obtaining foreign credit lines as a stopgap measure to the on-going forex crisis.  However, he stressed that the country needs to close the current trade deficit in order to continue to import theses essential items without any difficulties.

In addition, the country also has external debt servicing obligations of over US$ 4 billion per annum at least until 2025. 

Under the current environment, analysts largely expect the government to enter into a debt-restructuring programme with IMF backing.

However, Secretary to the President P. B. Jayasundera recently stressed that the country possess sufficient expertise to restructure its debt without the IMF, if the need arises.