Sri Lanka asks IMF for 1 year loan extension
Sri Lanka has asked the International Monetary Fund (IMF) to extend a $1.5 billion loan by another year and relax its tight spending targets ahead of key elections, two government sources close to the negotiations told Reuters on Tuesday.
The loan is crucial for Sri Lanka, which plans to sell up to $3 billion of bonds as early as next week and needs the IMF programme to continue to ensure more attractive borrowing terms.
The global lender delayed discussions on the sixth tranche of a three-year loan in November after a political crisis that has led to a slump in economic growth on the island.
At the time, the IMF said it had suspended the programme until it had more clarity on the political situation, after President Maithripala Sirisena abruptly sacked his prime minister in a move that was later ruled unconstitutional.
The government has requested the IMF push back its deficit target of 3.5 percent of gross domestic product (GDP) agreed under the loan programme to 2021 from 2020, a senior government official familiar with the discussions told Reuters.
“The discussions were focused on budget deficit and expenditure numbers,” the source said.
“We will not deviate from the fiscal consolidation path. But expenditure cannot be drastically curtailed this year, given it is an election year. We hope there could be a compromise.”
A second official said Colombo had told the lender that an IMF-backed revenue act, which was a condition for granting the loan, also needs amendments.
Officials from the IMF were not immediately available for comment. The talks will end on Thursday.
The IMF has disbursed over $1 billion of the $1.5 billion loan agreed in 2016. It was designed to avert a financial crisis and support the economic reform agenda of President Maithripala Sirisena’s coalition government.
Sri Lanka is due to hold a presidential election this year and parliamentary polls in 2020.
Junior Finance Minister Eran Wickremeratne told Reuters that the government will move ahead with a plan to sell sovereign bonds after the IMF discussions conclude.
Sri Lanka is struggling to repay its foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first three months. It used its reserves to repay a $1 billion sovereign bond loan in January.
The South Asian island nation failed to finalise financing it had planned in the first quarter, including a $300 million loan from Bank of China and a $400 million swap from Reserve Bank of India.
Sirisena’s abrupt change of prime minister and decision to dissolve parliament created panic and uncertainty among investors, who dumped Sri Lankan government bonds and other assets, sending the rupee currency to record lows.
The move was later ruled unconstitutional and Ranil Wickremesinghe was reinstated as prime minister after 51 days.
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The Begging Bowl !!
That’s what our leaders are capable of and, my dear fellow citizens, we elected these cocaine smelling leaders to Parliament!
This is to pay for the debts for previous loans to buy luxury cars and expediencies properties. That bartered J.R is the one who put this country in this mess and followed by that thug Premadasa.. Chandrika and Mahinda. So much borrowed it will be difficult pay these and only way is to sell part of the country and send poor people to work in middle east as servants road sweepers and toilet cleaners.,
Oh So the tune now. Chandrika is another one to blame for the failiers of Yahapalnaya. How can they rescue the country from debt when the first thing they did was rob the people of Lanka with Central bank affair.Its really very amazing and amusing how sime people never mention this robbery but kerp on blaming MR for Yahapalnyas failures. Its been almost five years and still blaming MR who they oromised to send to prison with the entire family. Obviously either they were false alligatiins or they are afraid that they are living in glass houses.
The entire purpose of the political system is to protect fraud, theft, corruption and misdeeds committed by current and previous political leaders.
All political leaders, Red, Blue, Green, Pohottu and all others are the best of friends amongst themselves.
The flaying of one party by the other in public platforms and other media is a drama for the consumption of innocent voters.
The R Family Billions and the Bond Scam billions and the wealth from Bandwidth sales to Maharaja and commissions from buying outdated aircraft and ships will never be recovered.
All politicians will continue to enjoy luxury lives with luxury cars, tax payer funded staff, electoral offices, free Air Force helicopter trips, free overseas holidays and many other benefits.
IYou hit nail on the head fitery. They scratch others back. And to think some idiots kill each other for these politicians displays how ignorrant they are. Althogh the R family would have made their money at least we have some decentvroads and the country was clean whike the R’s were in power. At the moment nothing of significance is happening other than borrowing more money and vlamimg otheres for these joker’s mistakes.