Gammanpila favours deal with IMF, says most ministers like minded

Sri Lanka should enter an deal with the International Monetary Fund (IMF), Petroleum Minister Udaya Gammanpila said as forex shortages delayed oil imports and power cuts were imposed as fuel supplies were disrupted.

“I have expressed my view that we should go to the IMF. Now most of the the cabinet ministers are for an IMF deal,” Minister Gammanpila told reporters on Friday. “The final decision has to be made by the Finance Ministry and the Central Bank.”

The CPC has been unable to buy dollars amid forex shortages triggered by liquidity injections made to enforce a 6.5 percent policy rate. Some of the liquidity injections are made to offset central bank dollar sales to the CPC itself.

An IMF program would force a rate hike and a float, which will end the money printing, allowing imports to match inflows.

Meanwhile ships were sometimes stuck at an offshore unloading point off the capital Colombo as banks and the utility scrambled for foreign exchange.

“A ship from Petro China has to keep waiting in sea for 11 days because we did not have dollars,” Gammanpila said. “We had to keep two ships like that.”

Two ships with petrol and diesel are expected to arrive Saturday.

“The Central Bank, People’s Bank, and Bank of Ceylon are trying their best to find us dollars,” Gammanpila explained. “The central bank has agreed to give us 60 million US dollars to clear two shipments coming tomorrow (Saturday). These dollars are now being collected and I hope it could be done by today. (Friday).”

The CPC had also got a 500 million US dollar credit line from India, which would be active from April. Earlier last week India sent a 40,000 litre shipment of oil ahead of the official launch of the credit line.

(Source: ECONOMYNEXT – By Shihar Aneez)