Treasury receives US $ 695mn under IMF bailout programme

From left: IMF Resident Representative for Sri Lanka Martha Tesfaye Woldemichael and Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando discuss the ongoing engagement under the IMF-supported reform programme, at the Finance Ministry yesterday

Sri Lanka received US $ 695 million from the International Monetary Fund (IMF), following the completion of the fifth and sixth reviews of its Extended Fund Facility (EFF), the Finance Ministry confirmed yesterday.

Finance and Planning Deputy Minister Dr. Anil Jayantha Fernando said the Treasury had received the sixth and seventh tranches of the IMF programme, after the successful completion of the latest reviews, taking the total disbursements under the four-year bailout programme to more than US $ 2.4 billion.

The Sri Lankan rupee has been under pressure in the recent weeks, due to the higher global oil prices and increased import demand linked to the conflict in the Middle East. The authorities have repeatedly maintained that the exchange rate flexibility remains an important component of the IMF-backed reform programme.

Dr. Fernando said the receipt of the funds had contributed to strengthening the country’s foreign reserve position and dismissed criticism surrounding the recent depreciation of the rupee.

He attributed the latest disbursement to the government’s implementation of the economic reforms agreed with the IMF, arguing that the policy measures undertaken since the economic crisis had improved Sri Lanka’s ability to withstand the external shocks.

“The country’s economy has reached a level where it can absorb economic shocks, particularly those arising from the conflict in the Middle East and recent adverse weather events,” Dr. Fernando said in a statement issued by the Finance Ministry.

He noted that the government had also expanded support for vulnerable groups affected by the recent crises. He said around Rs.500 billion had been allocated in response to the disaster-related impacts, while Rs.100 billion had previously been earmarked to address the economic pressures linked to the Middle East conflict. The Cabinet had recently approved an additional Rs.20 billion for relief measures, he added.

Meanwhile, IMF Resident Representative for Sri Lanka Martha Tesfaye Woldemichael met Dr. Fernando at the Finance Ministry yesterday to discuss the ongoing engagement under the IMF-supported reform programme.

The IMF Executive Board last week approved the combined fifth and sixth reviews of Sri Lanka’s EFF arrangement, enabling the immediate disbursement of approximately US $ 350 million and bringing the total IMF financial support under the programme to about US $ 2.44 billion.