President Ranil Wickremesinghe emphasized that Sri Lanka is no longer deemed bankrupt by the world, in a special statement following the approval of the extended credit facility by the Executive Board of the International Monetary Fund (IMF).
“The Executive Board’s decision will enable an immediate disbursement equivalent to SDR 254 million (about US$333 million) and catalyze financial support from other development partners.
The President further stated that the loan facility serves as an assurance from the international community that Sri Lanka has the capacity to restructure its debt and resume normal transactions. Additionally, the President noted that the government is working to gradually lift import restrictions on essential goods, medicines, and tourism-related goods, as the foreign exchange situation improves.
“This is a historic milestone for the country as the Government seeks to restore macroeconomic stability and achieve debt sustainability”.
The President also tabled a full statement on the IMF proposals in Parliament yesterday. He expressed gratitude to all countries that supported the International Monetary Fund agreement, as well as the heads of the International Monetary Fund and the World Bank.
“I express my gratitude to the IMF and our international partners for their support as we look to get the economy back on track for the long term through prudent fiscal management and our ambitious reform agenda.”
Swift implementation of EFF-supported program critical
Following the Executive Board discussion on Sri Lanka, IMF Managing Director Kristalina Georgieva, issuing a statement said, “Sri Lanka has been facing tremendous economic and social challenges with a severe recession amid high inflation, depleted reserves, an unsustainable public debt, and heightened financial sector vulnerabilities. Institutions and governance frameworks require deep reforms.”
“For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical.Ambitious revenue-based fiscal consolidation is necessary for restoring fiscal and debt sustainability while protecting the poor and vulnerable. In this regard, the momentum of ongoing progressive tax reforms should be maintained, and social safety nets should be strengthened and better targeted to the poor. “Having obtained specific and credible financing assurances from major official bilateral creditors, it is now important for the authorities and creditors to make swift progress towards restoring debt sustainability consistent with the IMF-supported program.”
“Sri Lanka should stay committed to the multi-pronged disinflation strategy to safeguard the credibility of its inflation targeting regime. As the market regains confidence, the authorities’ recent introduction of greater exchange rate flexibility will help to rebuild the reserve buffer.”
“Maintaining a sound and adequately capitalized banking system is important. Implementing a bank recapitalization plan and strengthening financial supervision and crisis management framework are crucial to ensure financial sector stability.”
“The ongoing efforts to tackle corruption should continue, including revamping anti-corruption legislation. A more comprehensive anti-corruption reform agenda should be guided by the ongoing IMF governance diagnostic mission..”
IMF, World Bank and ADB to provide USD 7 Bn
The Minister of State for Finance Dr. Ranjith Siyambalapitiya says that Sri Lanka will receive around USD 333 million in the next few days as the first installment of the loan portion and this amount will be credited to the account of the Treasury Deputy Secretary of the Central Bank.
“This amount will also help towards breaching the budget deficit.”
The minister also indicated that with the agreement given by the IMF, the World Bank and the Asian Development Bank are ready to provide around USD 7 billion in funding.
He also said that with IMF approval Sri Lanka will become a country that has established financial confidence internationally. The government now has a responsibility to honor the IMF agreement. “President Wickremesinghe should be thanked for winning the trust of the international economic mission.”
IMF program helps boost confidence of capital markets
Chairman Board of Investment and President international chamber of Commerce, Top business leader and professional Dinesh Weerakkody said that the approved IMF program will help to give confidence to Sri Lanka’s in capital markets and have a positive impact for international ratings agencies like Fitch Ratings and Moody’s. He said it will also give a strong positive message for corporate and public institutions investors for BOI venture and also for Colombo Port city development.
“As anticipated, the IMF Executive Board approved the Extended Fund Facility to Sri Lanka at its Board meeting on Monday and President Ranil Wickremesinghe and the Central Bank must be congratulated for his relentless efforts to stabilize the economy and close the IMF EFF facility with IMF Managing Director Kristalina Georgieva.
Hard work and focus enabled completion of the process in record time
State Minister for Finance, Shehan Semasinghe said that over the last eight months, the government worked relentlessly with the IMF and official creditors to reach Staff-Level Agreement, receive financing assurances from our bilateral creditors.
“On Monday we received approval of our program from the IMF Executive Board.”
The Government’s hard work and focus allowed us to complete the process in record time, unlocking up to $7 billion in funding from IMF and similar agencies to Sri Lanka in the future.” (SS)
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