Plans To Burrow US$ 4B From IMF, WB
The new government will seek to borrow more than $4.0 billion from the IMF and other international lenders as it ‘restructures’ expensive Chinese debt, Finance Minister Ravi Karunanayake said on Thursday, February 12.
He said he would be travelling to Washington this week for talks with the International Monetary Fund and the World Bank on securing support to boost reserves and finance investments in health and education.
“With the new government in place, there is a lot of international goodwill,” Karunanayake said and added, “We would love to have an enhanced programme with the IMF for balance of payments support.”
Sri Lanka plans to tap the IMF for about $4.0 billion while additional funding would be sought from the World Bank.
The previous IMF bail-out was $2.6 billion in 2009, when Sri Lanka faced a balance of payments crisis at a time when Tamil Tigers were being defeated in a major military move. China, Sri Lanka’s biggest lender in recent years, has funded much of the country’s post-war infrastructure projects under the previous administration of former President Mahinda Rajapaksa.
Pointing out that those loans had been granted on average at rates of between five and seven per cent, the minister said that, “In some cases, the interest rate on Chinese loans is as high as eight per cent. Where possible, we want to renegotiate and reduce the rate.”
Sri Lanka’s economy is among the fastest growing in South Asia, but the IMF last year warned the island was vulnerable to sudden external shocks due to high levels of foreign commercial borrowings.
By the middle of last year, Sri Lanka’s foreign borrowings stood at $42.4 billion, up from $39.7 billion at end 2013 and a figure the IMF considers high.
