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Past and current CBSL Governors anticipate bailout by December

26 Jul 2022

 
  • Dr. Coomaraswamy, Dr. Nandalal both hopeful of IMF assistance within five months
  By Imesh Ranasinghe  Former Central Bank of Sri Lanka (CBSL) Governor Dr. Indrajit Coomaraswamy says Sri Lanka could hopefully obtain an International Monetary Fund (IMF) facility by December, given that a staff-level agreement with the IMF is reached “within a matter of weeks”. Speaking to The Wire, he said that it would take five or six months to obtain the IMF loan, and that during this period, President Ranil Wickremesinghe would have to obtain bridging finance to import essentials such as fuel, medicine, and food. “If we are able to reach a staff-level agreement within a matter of weeks, the facility will be finalised and disbursed probably in December or so,” he said. Further, he said that with the staff-level agreement in place, friendly nations such as Japan will feel more inclined to assist Sri Lanka in its recovery. “If we don’t enter into an IMF programme, we have no chance of getting out of this mess,” the former Governor said. Similarly, incumbent CBSL Governor Dr. Nandalal Weerasinghe also said in a different  interview with CNN last week that Sri Lanka would be able to obtain an IMF bailout package “probably somewhere in December”, until which Sri Lanka will have to seek short-term financial assistance to import essentials. Further, he said that Sri Lanka has a clear path set, and if the Government follows that path, which includes reaching a staff-level agreement with the IMF and reaching consensus with creditors, he is confident that Sri Lanka could overcome the crisis in four or five months. However, Dr. Coomaraswamy said that it will take Sri Lanka at least five years to achieve GDP growth similar to that in 2019, before the pandemic. He said since 2019, Sri Lanka had one year of negative 3% growth and another year of positive 3% growth in GDP, but under the latest forecast by the IMF, Sri Lanka will have a growth of negative 7% in 2022 and further negative growth in 2023, which could take the overall contraction to between 8-10%. “It will take us another three years or so to make up for that, So we are talking about five years, in terms of regaining the level of GDP growth we had in 2019,” he added.

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