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Govt. monetary gatekeepers meet creditors in virtual meeting

04 Nov 2022

  • Finance Ministry, CBSL hold virtual meeting with official creditors
Sri Lankan monetary authorities, led by Secretary to the Finance Ministry and Treasury Mahinda Siriwardana and Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe, held a virtual meeting with the country’s official creditors yesterday (3).  Sri Lanka remains fully committed to advancing engagements with all its creditors and this meeting was another step towards securing International Monetary Fund (IMF) Board approval for Sri Lanka’s IMF bailout programme. State Minister of Finance Shehan Semasinghe said: “Sri Lanka is at a critical stage, and we are seeking IMF programme approval as soon as possible so that we can restore macroeconomic stability. We are grateful to our bilateral partners for their continued engagement and support during this process. The IMF programme and our ambitious economic reforms will restore public debt sustainability, help protect the most vulnerable, and restart our growth engine. This Government is focused on re-establishing social and economic prosperity, and ensuring that our citizens have access to critical public services.” Dr. Weerasinghe said: “The IMF programme and the economic reforms agenda will reconstitute Sri Lanka’s financial buffers.” Sri Lanka reached a staff-level agreement with the IMF on a four-year programme supported by the Extended Fund Facility on 1 September 2022. The programme, amounting to $ 2.9 billion, is expected to restore macroeconomic stability and debt sustainability while protecting the vulnerable, and safeguarding Sri Lanka’s financial system. This agreement remains subject to IMF Executive Board approval.  The IMF programme has been centred on Sri Lanka’s ambitious reform programme, which is based on four pillars. The first pillar is fiscal reform. The programme foresees the implementation of ambitious revenue-based fiscal consolidation measures, combined with revenue administration reforms, and the introduction of fuel and electricity pricing mechanisms in order to minimise fiscal risks stemming from State-Owned Enterprises (SOEs). It also includes the enhancement of existing social safety nets in order to protect the most vulnerable.  The second pillar will be to restore public debt sustainability. Sri Lanka’s debt situation has been deemed unsustainable by the IMF, and will need to be addressed by comprehensive debt treatment.  Thirdly, the programme will aim to restore price stability and rebuild external buffers. The Government is committed to refraining from any monetary financing and the Cabinet will soon approve the CBSL Act, which will aim to strengthen the central bank’s independence and modernise its policy framework.  The fourth pillar is the safeguarding of the financial system’s stability, a key condition to Sri Lanka’s economic recovery. This will be achieved by ensuring that Sri Lanka’s banking system is adequately capitalised, and by strengthening the resilience and governance of its State-owned banks.  Additionally, the Government will introduce a series of anti-corruption reforms that will align Sri Lanka’s legal framework with international standards, and will implement broader structural reforms to unlock Sri Lanka’s growth potential.


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