IMF wants social stability maintained in order to help Sri Lanka
The International Monetary Fund (IMF) wants social stability maintained in order to help Sri Lanka to effectively manage the economic issues.
The Finance Ministry said that International Financial Institutions (IFIs), including the IMF, have emphasized the importance of maintaining social stability and protecting democratic institutions in the country for them to assist Sri Lanka to effectively manage the economic issues confronted by the country and the people.
Issuing a statement today, the Finance Ministry said that a Sri Lankan delegation, led by Minister of Finance Ali Sabry, participated in the 2022 Spring meetings of the IMF and the World Bank Group held in Washington DC during 18-22 April 2022.
The delegation had meetings with several International Financial Institutions including the IMF and the World Bank, and bilateral partners during their stay in Washington DC.
The discussions were mainly focused on the present critical situation of the Sri Lankan economy, and policies and measures to be implemented in the immediate, short, and mediumterm.
The key areas discussed included (a) addressing the immediate need of restoring supply chains of essential items, including fuel, LP gas, and pharmaceuticals, (b) securing bridge financing in the interim period until IMF financing with an economic programme is finalized, and (c) implementing short to medium term policies to ensure macroeconomic stability and facilitate greener, more inclusive, sustainable, and stable growth in the country. Views were exchanged on ways and means of supporting the people in the immediate term and the future direction of engagement with Sri Lanka on a more coherent manner.
The Finance Ministry said that the overwhelming support, cooperation and solidarity extended to the people of Sri Lanka by all key IFIs, other institutions/agencies and friendly nations were extremely encouraging during this critical juncture of the Sri Lankan economy.
The delegation met with the IMF’s Managing Director, First Deputy Managing Director and Deputy Managing Director overseeing Sri Lankan affairs, as well as other senior officials at the technical level.
The meetings with the IMF were focused on securing an Extended Fund Facility (EFF) to overcome the current difficult situation in the Sri Lankan economy with a mediumterm view, following the formal request made by Sri Lanka in mid-March 2022. A formal request was also made for a Rapid Financing Instrument (RFI) for consideration of the IMF to obtain immediate financing into the country, which will be a bridge to the EFF.
The Finance Ministry said that entering into a staff level agreement on an IMF programme as early as possible is important since it will help unlock bridge financing facilities from other IFIs and bilateral partners. Among specific topics discussed with the IMF were the debt restructuring process, revenue and expenditure measures of the government, public financial management, reforms of state-owned enterprises and energy pricing, strengthening social safety nets, monetary policy and Central Bank independence, foreign exchange management, financial sector policies, and growth enhancing structural reforms.
An IMF mission is expected to conduct in-person and/or virtual technical meetings with Sri Lankan authorities in early May 2022 towards reaching an agreement within a short period on a programme for Sri Lanka in parallel to the debt restructuring process. (Colombo Gazette)
