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Assistance: Government submits requested documents to IMF

18 Jun 2022

 
  • ADB, WB additional funding dependent on IMF programme
  • Creditors will engage with Govt. after IMF announcement: Rathnayake
  By Maheesha Mudugamuwa A delegation from the International Monetary Fund (IMF) will commence a two-week physical mission in Sri Lanka from tomorrow (20), following the submission of all documents requested by them from the Sri Lankan Government, The Sunday Morning learns. The documents had been requested by the IMF following a virtual mission held two weeks ago.  The Government is hopeful that Sri Lanka will reach a staff-level agreement with the IMF, which would enable the country to seek better financing agreements at a multilateral level. Speaking to The Sunday Morning, Treasury Deputy Secretary R.M.P. Rathnayake said: “Until we reach a staff-level agreement with the IMF, we don’t have predictable foreign exchange sources. Even our traditional donors like the World Bank (WB) and Asian Development Bank (ADB) have constraints from their Boards, and without IMF consent or a long-term plan with the IMF, they can’t provide additional financing.” He added that the Ministry had been repurposing the already-committed funds, which remained unutilised to meet the fund requirements based on priorities. “In order for us to get new financing, we need to quickly come up with an IMF agreement. We had a virtual mission two weeks back with the IMF team and we have already submitted all the required documents, including numbers, plans, and fiscal statements. We are now waiting for their response,” Rathnayake said. According to the Treasury Deputy Secretary, the IMF will commence its physical mission in Sri Lanka from Monday and it will take around two weeks. “After that we are hopeful that we can come to some kind of understanding about the staff-level agreement. That will take one or two weeks to go to their Boards, but at the staff-level we can come to an understanding, and once it is announced, some of the creditors will engage with the Government,” he said, adding that the creditors were now naturally restricted because they needed to have some kind of an assurance internationally. “Once that assurance is given, they will be okay. Then we can go for big financing arrangements, bilateral or multilateral. We can justify it to their Boards and obtain their support, and in that way we can ease the foreign exchange issue. If we can do that, then we will gradually overcome,” he explained. Furthermore, explaining the current financial situation, Rathnayake stressed that the measures taken by the Central Bank of Sri Lanka (CBSL) were showing positive results. “The rupee has now been stabilised and remittances are coming into the country through the banking system. Earlier we didn’t receive remittances through the banking system due to the black market, but now we have some money. We hope we can resume the committed transactions we couldn’t complete earlier, and we can honour our commitments within the next few weeks,” he assured. The Government has decided to seek IMF assistance to combat the worst economic crisis since the country’s independence in 1948. The talks between Sri Lanka and the IMF commenced on 18 April and some measures have already been initiated to restructure the country’s foreign debts – a prerequisite for an IMF programme – after the Government suspended all external debt repayments on 12 April.    

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