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Last Updated : 2024-05-08 08:18:00
2 September 2022 01:05 am - 9 - {{hitsCtrl.values.hits}}
IMF mission chief for Sri Lanka Masahiro Nozaki (left) and senior mission chief Peter Breuer addressing the media at the Central Bank premises yesterday. Pic by Kithsiri de Mel
By Indika Sakalasooriya
The International Monetary Fund (IMF) yesterday said Sri Lanka should move forward “expeditiously” to secure debt relief from its creditors to ensure debt sustainability as disbursement of any IMF financing is contingent upon that and the reforms carried out by the authorities to restore macroeconomic stability.
Sri Lanka yesterday entered a staff-level deal with the IMF for a potential 48-month US$ 2.9 billion Extended Fund Facility (EFF), subject to the approval of the IMF management and the executive board.
“The staff-level agreement is only the beginning of a long road ahead for Sri Lanka to emerge from the crisis,” IMF senior mission chief for Sri Lanka, Peter Breuer told reporters in Colombo.
He said Sri Lankan authorities have already begun the reform process, and stressed on the need to continue on that path with the support of all segments of the society.
In tandem with the reform process, Breuer also said the debt restructuring negotiations with Sri Lanka’s creditors—both official and private—should get underway immediately with the support of the legal and financial advisors appointed by the authorities.
“Once these financing assurances (from creditors) are secured, then we can move to a disbursing arrangement that can be considered by the executive board, and then ultimately disburse,” he said.
If creditors failed to provide these assurances, Breuer said it will deepen Sri Lanka’s crisis and undermine its repayment capacity as the resources available at the country’s disposal to repay will further diminish.
“So, it is actually in the interest of all creditors to collaborate with Sri Lanka, so that Sri Lanka could emerge from this crisis as quickly as possible and regain its repayment capacity and service its debt,” he pointed out.
Sri Lanka’s debt situation is a unique one, as much of its debt is outside the Paris Club creditors. Sri Lanka owes large sums of moneys to India and China, who are not Paris Club members. While India has signaled its liking to provide Sri Lanka with debt relief, China’s position to this day remains unclear.
At Sri Lanka’s request, Japan has come forward to organise a Sri Lanka creditors’ conference to help the island nation emerge from the worst economic crisis since its independence. But, it is not clear whether China would join this conference.
Meanwhile, the reform programme Sri Lankan authorities have come up with and supported by the IMF includes fiscal consolidation via major tax reforms, cost-recovery based pricing for fuel and electricity, implementation of targeted safety nets for the vulnerable, data driven-monetary policy, and a flexible exchange rate. The policy package also undertakes to assure Central Bank’s autonomy and reduce corruption vulnerabilities.
Nish Friday, 02 September 2022 07:49 AM
Didn't we expect this? IMF is only pledging some $2.2b in installments only when certain conditions are met. SL politicians and public servants never understood what is meant by economic reforms or restructure of loss making State businesses. All they knew and still know about was/is putting more and more of their political supporters to non-existent jobs, resulting in 85% these institutions' costs being driven by salaries. Now they can't get rid of them easily. Unlike in other progressive countries, I have never seen public sector job redundancies in SL at all. Then, no one has been successfully prosecuted for corruption in SL, even though massive amounts of money has been going to corrupt politicians and public servants. Will this ever stop?
Nilmini Welivita Friday, 02 September 2022 07:50 AM
If IMF expects Ranil and his band of thieves to act expeditiously to do anything that doesn't benefit them, IMF will have to wait for the next generation.
Mizaru Friday, 02 September 2022 08:18 AM
This is basic economics. Successive Sri Lanka governments borrowed unprecedentedly on unproductive projects just to get commissions. Then Ranil wants Japan to sort out the issued with our creditors. May be he was indirectly asking Japan to reciprocate on a statement made after world war 2. That is history uncle and now Sri Lanka has to take care of its backyard.
Punchi Friday, 02 September 2022 09:08 AM
We celebrated too early, the party is not over until the fat women sings
IMF wants us to be head bowed to govenment Friday, 02 September 2022 09:36 AM
The IMF in effect asking for 'support of all segments of the society' to support it's plan with the government is asking us to be head bowed, and keep being repressed for the 3 billion dollars. Rounding our population to 20 million, for 150 USD each for two year, we have to go along with everything the government has as part of it's regime. Including giving up protesting freely as we see fit to improve our society.
Jude Friday, 02 September 2022 09:48 AM
If chinese give us a break and if we can recover at least half of the money that Rajapaksa clan looted then we're in a much better situation!! Yeah!!
BuffaloaCitizen Friday, 02 September 2022 10:26 AM
Economic Stability can come only after Rajapakse's and their hench-aiya's are laid to rest 6 feet below ground. Until then, we are in turmoil, given that we have a very foolish population specially in south.
Jef Friday, 02 September 2022 04:59 PM
Chinese no fool's we have to wait and see The agreements done long time ago Chinese policy is you borrowed with no obligation then you pay if not give us asserts property etc..sri Lanka have lost basically everthing due to greedy corrupt politicians and officials few hundreds benifited millions are suffering if it was commission we wouldn't be in the mess its more than the commission they manipulated countries financial to benifit own pockets gradually sri Lanka had no money left everyone was sleeping until nothing was left ...at least now people must elect and select professional honest decent educated politicians from our society never let any bad apples come close the political system need Reforms government sectors in all categories need Reforms that have no liency special commission to monitor and prosecute ministerial powers must be taken off for use of influence by police or any other formats to undermind law full prosidures and many elegal activities must be stoped Good luck
Allen Selwyn Friday, 02 September 2022 05:17 PM
Somehow the mathematics does not add up. When bankruptcy was declared in late April India stepped in with $3.8B. This money was spent in 4 months. IMF is "lending" $3B in 4 years subject to various conditions yet Ranil is celebrating? Either the Sri Lankan's are dumb or Ranil is a genius.
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