• Sat. Sep 18th, 2021

Sri Lanka’s discussions for emergency financial support with IMF failed due to disagreements over policy requirements

The International Monetary Fund (IMF) couldn’t proceed with disbursing emergency financial support for Sri Lanka as the discussions failed due to disagreements over policy requirements on debt sustainability to address the balance of payment challenges, IMF Spokesperson, Gerry Rice said.

He noted that IMF received a request from the Sri Lankan government seeking emergency financial support to help fight the COVID pandemic.

“The assessment of that support has taken longer than for other countries due to Sri Lanka’s daunting economic challenges and high public debt. So we have sought, but not reached understanding, on how to fulfill the key requirements for what could be a rapid financing instrument which would include policies to continue ensuring debt sustainability to address the balance of payment challenges including from the COVID‑19 impact on tourism and to preserve international reserves,” he said.

Instead of IMF funds, he remarked that Sri Lanka has relied on important restrictions since last year and l measures such as a requirement to convert 25 percent of export proceeds to address BOP issues.

Further, Sri Lanka recently secured a $1.5 billion SWAP line with the People’s Bank of China

“We continue to closely monitor these economic policy financial developments in Sri Lanka including the recent agreement on a swap line with the People’s Bank of China,” he said.

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