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SL’s IMF financing request nears one year

11 Apr 2021

  • IMF says still ‘reviewing’

  • Cabraal questions RFI’s ‘rapidness’

By Zahida Rizvi Regardless of Sri Lanka’s request from the International Monetary Fund (IMF) for a Rapid Financing Instrument (RFI) edging a full year, both Sri Lanka and the IMF are yet to make progress on the RFI, The Sunday Morning Business learns.  Sri Lanka submitted the request to the IMF for emergency financial support under the RFI in April last year. In mid-April, then IMF Acting Mission Chief for Sri Lanka Mashiro Nozaki confirmed to The Sunday Morning Business that this request was being reviewed. Nozaki added that the RFI, if approved, could potentially replace the existing $ 1.5 billion Extended Fund Facility (EFF) arrangement of Sri Lanka with the IMF, of which Sri Lanka has so far received $ 1.3 billion However, when we inquired regarding this last week, the IMF responded with the following, which has been the same reply for the past few months: “In April 2020, we received a request from the Sri Lankan authorities for emergency financial support under the Rapid Financing Instrument. Assessing relevant conditions for the RFI has taken longer than for other countries, due to Sri Lanka’s daunting economic challenges and high public debt. Staff have sought but not reached an understanding on how to fulfil key requirements for the RFI, which include policies to continue ensuring debt sustainability.”  Meanwhile, State Minister of Money and Capital Markets and State Enterprise Ajith Nivard Cabraal told The Sunday Morning Business that Sri Lanka will not be pursuing the RFI from the IMF. He emphasised that the IMF dragged its feet in providing Covid-19 assistance to Sri Lanka last year. He even questioned what is so rapid in the RFI if it has been almost a year since the request was made.  “Thereby, currently we are not in need of the RFI initiative, since the Government managed to effectively provide the necessary relief and support to the Sri Lankan people as well as maintain a framework of sound macro fundamentals even without financial assistance from the IMF,” Cabraal stated. Following the global outbreak of the pandemic, the IMF received about 102 requests from countries seeking RFI support. As of mid-September last year, about 76 out of these 102 requests had been approved, according to the IMF. This means that Sri Lanka was among approximately 20 or 30 countries that had not been granted RFI support at that point. The 76 approved countries include a number of Asia Pacific countries such as Bangladesh, Mongolia, Myanmar, and Nepal. On 29 May, Bangladesh was approved $ 488 million under the RFI while on 26 June, Myanmar was approved $ 237.7 million. On 3 June, Mongolia was approved $ 99 million under the RFI. The total of the approved funds under this facility was $ 31 billion by end-September.


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