Tuesday, 31 December 2019 08:46

IMF ready to continue constructive cooperation with Sri Lanka

The International Monetary Fund is ready to continue its ‘constructive cooperation’ approach with Sri Lanka under new President Gotabaya Rajapaksa relating to the disbursement of the final tranche of the US$1.5 billion Extended Fund Facility (EFF)

This was conveyed by the IMF media relations division to the Business Times in response to an e–mail query raised on the present status of the EFF after the change of the regime and recent monetary policy measures including tax cuts announced by the new government.

The IMF media relations division quoted its mission chief for Sri Lanka Manuela Goretti as saying that the fund is ready to engage with President Rajapaksa’s administration on the continuation of the EFF arrangement in the development of a comprehensive policy agenda.

This policy agenda supports economic growth for the people of Sri Lanka and reduces inequality, while managing external risks and the challenges of public debt sustainability, she added.

The IMF is in contact with the Ministry of Finance to obtain further information to assess the recently announced tax measures, she disclosed.

The Executive Board completed the Sixth Review of the EFF arrangement on November 1.

The Seventh and final review of the EFF arrangement can take place any time after April 3, 2020, based on the EFF schedule, with the arrangement set to expire on June 2, she pointed out.

On May 13, 2019, the Executive Board approved an extension of the arrangement by one additional year, until June 2, 2020, with re-phasing of remaining disbursements considering the country’s economic situation.

This extension of the EFF has been given to Sri Lanka by considering the economic set back following the 52 day political impasse in October 2018 and the Easter Sunday terror attack in April 2019.

However the completion of the 6th review, upon the granting of a waiver of non observance for the end June 2019 performance criterion on the primary balance, enables the disbursement of about $164 million, bringing total disbursements under the arrangement to $1.31 billion.

Sri Lanka will be holding discussions with the IMF in January or February next year on the possibility of obtaining the final tranche of $190 million or to enter into a different co-operation arrangement in accordance with current economic policies, official sources said

(LI)

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