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Decision on IMF assistance on Monday?

31 Dec 2021

  • Environment Minister says Treasury Secretary, CBSL Governor summoned to Cabinet meeting  
BY Pamodi Waravita Environment Minister Mahinda Amaraweera has said that Finance Ministry and Treasury Secretary S.R. Attygalle and Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal have been summoned to the Cabinet of Ministers’ meeting scheduled for 3 January 2022, where a final decision on whether the Government will seek assistance from the International Monetary Fund (IMF) will be made. “I think that Attygalle and Cabraal have been summoned to the Cabinet meeting on 3 January 2022. There, we can make a final decision on whether or not to go to the IMF. At this time, we have two measures for the current US dollar (USD) deficit in the country. One is to go to the IMF. The other is to get support from our allies. I don’t mean borrowing at interest. We can get assistance from friendly countries under long-term concessional interest rates,” said Amaraweera while addressing the media on Wednesday (29). He said that he sees “nothing wrong” in seeking help from the IMF, as all the conditions they impose need not be accepted. “There is nothing wrong with going to the IMF. We have to go. There is nothing else to do at this point. Our economy is in a big crisis, so there is nothing wrong with going to the IMF. But we don’t have to accept all the conditions they set.” Although there was speculation earlier this month as well that Cabraal has been summoned to previous cabinet meetings, he denied this claim in a Twitter message on 13 December, adding that the news was “originated by an Opposition politician”. During the same week, Energy Minister and Cabinet Co-Spokesman Udaya Gammanpila told The Morning that there was no truth to reports that Cabraal and Attygalle were scheduled to meet with the Cabinet. In late November, the IMF told The Morning Business that its staff stands ready to discuss options with the Sri Lankan Government, during the visit of the fund’s representatives to Sri Lanka in December. The IMF disclosed this in response to media inquiry regarding the Article IV mission to Colombo in December. “A staff team from the IMF is scheduled to visit Colombo during the period from 7 to 20 December to conduct the 2021 Article IV consultation with Sri Lanka. The IMF has not received a request for financial support from Sri Lanka recently, but the staff stands ready to discuss options if requested,” noted IMF Mission Chief for Sri Lanka Masahiro Nozaki at the time. However, during the Monetary Policy Review press conference, held the next day, Cabraal stated that Sri Lanka is neither afraid nor has hindrances to approach the IMF for financial assistance, but it simply chooses not to, merely because it does not feel the need for it. “We have sought IMF assistance in 2009 and 2010. We, certainly, do not have any issues in going to the IMF if really required to do so. The reason why we have chosen not to seek their assistance is that our international sovereign bonds (ISBs) shot up to $ 15 billion by mid-2019 from a mere $ 5 billion in 2014. However, the gross domestic product (GDP) did not proportionately increase. As a result, we have begun looking for alternative financing options and that is what the IMF wants too. That is what they call ‘debt restructuring’,” Cabraal added. He further noted that if they are to seek IMF assistance, the fund might require the Government to depreciate the Sri Lankan rupee, increase interest rates, cut down the number of public servants, slash pension schemes, and sell state properties, which is a reform agenda the Government is not willing to comply with at the moment. Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva stated at a press briefing on 12 December that the Government of Sri Lanka could have gotten into IMF train eight months ago and the country could have also managed without a debt default, He stated: “Paying debts – we will have to restructure it the way we can know. The IMF’s structural assessment or stabilisation, that train has gone. Now the problem is deeper. Tell the Cabinet that we cannot pay our debts and we need a few years to go back to normal, with international help. We are ready to support the Government; for the sake of the public, we are willing to leave political differences aside. “If this (forex crisis) was discussed in November last year (2020), the country could have managed. The application for the IMF was postponed on multiple occasions, saying that money comes from here and there, and then swaps,” said Dr. de Silva, criticising the delay. Earlier this week, United National Party (UNP) Leader and Parliamentarian Ranil Wickremesinghe said that the USD crisis in the country has reached a “severe point” as businesses are closing, the middle class is under pressure, people are losing jobs, and farmers have been abandoned. “The Government is yet to come up with a solution. The Government must either go to the IMF or come up with a credible alternative. Neither has taken place so far. In the meantime, the people are suffering and the national mood is turning hostile to the Government.”


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