10 April 2020 02:13 am
As the economic fallout is becoming severe with the prolonged lockdowns in place to contain the spread COVID-19, the Sri Lankan government is likely to seek the support of the International Monetary Fund (IMF), but is awaiting the for the multilateral lender to set up a specific package designed to mitigate impacts from the virus.
According to a top government official on economic affairs, the Rajapaksa administration is waiting till the IMF structures a support package for nations affected by the virus no sooner the immediate health dangers of the virus dissipate.
However, he fell short of saying whether the administration is already in talks with the IMF and how much it may seek as a reasonably adequate amount to provide a buffer to
the economy.
Last week, the IMF said it stands ready to support the low-income countries affected by the virus originated in China, which now has become a pandemic engulfing the entire world.
The IMF has already taken action to provide relief for debt repayments for its poorest members under its Catastrophe Containment and Relief Trust.
Further, the Fund has already called to strengthen its crisis response by enhancing access to its emergency facilities under its Rapid Credit Facility and Rapid
Financing Instrument.
Besides, going beyond its traditional lending facilities, the Fund will also explore additional options to help its members facing foreign exchange shortages.
The IMF has a trillion dollar financial capacity to support its members.
The government has earlier called for deferments or moratoriums on its foreign debt and openly sought financial assistance from multilateral lenders until the country passed
this crisis.
Further, the government has decided to suspend or curtail all nonessential imports barring medicine and fuel in a bid to protect the rupee, which is sliding sharply against the US dollar.
Meanwhile, economist and JB Securities Managing Director Murtaza Jafferjee said it was quite natural for Sri Lanka to seek IMF support having gone to the Fund fifteen times before.
“And I don’t think there is anything wrong in reaching out to the IMF because we have gone to them fifteen times before. Going back for the sixteenth time is normal course of life in Sri Lanka,” he said.
Jafferjee estimates Sri Lanka may need up to US$ 2.5 billion from the IMF to get the economy back on track and rebuild the investor confidence in the economy.
IMF Chief Economist Gita Gopinath being interviewed by the late night comedy show host Trevor Noah in his The Daily Show said already over 90 countries had sought financial assistance from the IMF and it
was unprecedented.