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IMF suspends funding programme

18 Nov 2018

By Easwaran Rutnam As the political crisis continued last week, the International Monetary Fund (IMF) said it has decided to suspend funding for Sri Lanka. IMF official spokesperson Gerry Rice told The Sunday Morning that the IMF programme with Sri Lanka has been put on hold. “The programme is on hold pending further clarity on the political situation,” Rice told The Sunday Morning in a brief response to an email. Earlier, the IMF had told the newspaper it was monitoring the developments in Sri Lanka. Sri Lanka’s three-year extended arrangement was approved on 3 June 2016, to the amount of about $ 1.5 billion, or 185% of quota in the IMF at the time of approving the arrangement. The IMF programme for Sri Lanka is on the condition that Sri Lanka implements key economic reforms proposed by the IMF. Among the proposals was a fuel pricing formula and tax reforms. The fuel price formula was implemented by former Finance Minister Mangala Samaraweera. But, the new Government scrapped the formula and reduced fuel prices. The tax policy of the Ranil Wickremesinghe Government was also in line with the IMF expectations. Yet, the Mahinda Rajapaksa led government introduced changes to the policies after taking office last month. When contacted, State Minister of Finance Anura Priyadharshana Yapa said that he was unaware of the decision taken by the IMF.

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