IMF Executive Board approves US$1.5bn Sri Lanka loan
The International Monetary Fund’s (IMF) executive board has approved a three-year $1.5 billion loan to support Sri Lanka’s economic reform agenda, the global lender said on Saturday.
“The arrangement aims to meet balance of payments needs arising from a deteriorating external environment and pressures that may persist until macroeconomic policies can be adjusted,” the IMF said in a statement.
The decision will enable an immediate disbursement of $168.1 million and the remainder will be available in six instalments subject to quarterly reviews, the global lender said.
The Executive Board of the International Monetary Fund (IMF) today approved a 36-month extended arrangement under the Extended Fund Facility (EFF) with Sri Lanka for an amount equivalent to SDR 1.1 billion (about US$1.5 billion, or 185 percent of quota) to support the country’s economic reform agenda.
The IMF arrangement aims to meet balance of payments needs arising from a deteriorating external environment and pressures that may persist until macroeconomic policies can be adjusted. It is also expected to catalyze an additional US$650 million in other multilateral and bilateral loans, bringing total support to about $2.2 billion (over and above existing financing arrangements).
The Executive Board’s decision will enable an immediate disbursement of SDR 119.894 million (about US$ 168.1 million), and the remainder will be available in 6 installments subject to quarterly reviews.
During the same meeting, the Board also concluded the 2016 Article IV consultation. A separate press release will be issued shortly.
Following the Executive Board discussion on Sri Lanka, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“Despite positive growth momentum, Sri Lanka’s economy is beginning to show signs of strain from an increasingly difficult external environment and challenging policy adjustments. The new government’s economic agenda, supported by the Extended Fund Facility, provides an important opportunity to re-set macroeconomic policies, address key vulnerabilities, boost reserves, and support stability and resilience.
“A return to fiscal consolidation, targeting a reduction in the overall fiscal deficit to 3.5 percent of GDP by 2020, is the linchpin of the reform program. Rebuilding tax revenues through a comprehensive reform of both tax policy and administration will be key in this regard, supplemented by steps toward more effective control over expenditures and putting state enterprise operations on a more commercial footing.
“Medium-term growth prospects also need to be supported through a greater role for market forces and a decisive shift toward an outward orientation. A clear commitment to exchange rate flexibility will enable adjustment to a shifting external environment while allowing the central bank to rebuild foreign exchange reserves and focus more closely on its key mandate of price stability. The economic program also supports the government’s objective of boosting competitiveness and greater integration with regional and global markets through comprehensive trade reform and improvements to the investment environment. Steadfast implementation of these reforms should strengthen Sri Lanka’s ability to attract investment, improve prospects for sustained medium-term growth, and reduce fiscal risks.”
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Yes we need these loans and hand outs to buy food to fill the stomachs , and some chemical to clear the shit out from the brains of (memorize the book and pass the exam) Sri Lankens . which they accrued while at the so called universities (buru vidaiyalaya).
This will make the komis karayas happy.
Imagine commissions and kickbacks at 10%.
Anyway, the sunny side of this loan is that the CB Governor will not be required to auction Treasury Bonds for a while and that will impact on the elliptical path of his SIL in being the richest man in the world.
It takes almost 2 years for the IMF to process a pittance of a loan for over 3 years, with Indians guaranteeing the loan to offset the balance of payments.
One of the conditions is the increase in local taxes and as to how this would influence the balance of payments is mind boggling. If they really meant business then they ought to clamped down the import of cars for the next 2 years for looking around the new car inventory run to several thousand cars and the million odd 2 wheelers and 3 wheelers. Yes this would prevent sri lanka being reduced to a pauper state.
As is the IMF being run by idiots deliberating the lankan issue probably over a cup of coffee imported from another country reduced to bankruptcy through IMF loans coffee production are clueless what it is subsist on about dollar a day.
IMF failed miserably to address the concerns of subsistence moreso it is designed to destroy agriculture and become more dependent on hand-outs. Since sirisena and ranil is incapable of forging a viable policy that deal with the problem the country will be reduced to tent camps
I am not sure as to whether IMF dictates that half wits financial policy for the current exchange policy is designed to drain what little reserves there are and foreign exchange receipts go unaccounted. Money exchanges have mushroomed in the city and one is never sure as to one walks into a betting shop, bank or a authorized money changer.