IMF rules out fresh bailout for Sri Lanka
Posted on March 5th, 2015
Courtesy Channelnewsasia
The IMF on Wednesday (Mar 4) ruled out a fresh bail-out for Sri Lanka, which had hoped to secure loans of more than US$4.0 billion to restructure expensive debt taken on by the previous regime.
Much of the country’s post-war infrastructure under the administration of former president Mahinda Rajapakse was funded with Chinese debt and the new government had hoped to retire some of those loans.
Finance Minister Ravi Karunanayake travelled to Washington last month to try to secure loans from the International Monetary Fund and the World Bank. But IMF experts who reviewed Sri Lanka’s economy during a nine-day visit said the Indian Ocean island was not facing an immediate crisis.
Delegation leader Todd Schneider said Sri Lanka’s foreign reserves were comfortable compared to 2009, when it obtained a US$2.6 billion bailout at the height of a civil war. “The situation today is quite different,” Schneider told reporters in Colombo. “We only provide balance of payments support.”
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 US$42.4 billion, up from US$39.7 billion at end 2013, a figure the IMF considers high.
http://www.channelnewsasia.com/news/business/imf-rules-out-fresh/1694832.html
Sri Lanka needs fiscal consolidation to cut debt: IMF
Adaderana
An IMF mission led by Todd Schneider was in Sri Lanka to conduct a post-program monitoring after the completion of a 2.6- billion-U.S. dollar stand-by agreement in 2012.
Growth is likely to continue in the relatively robust range of 6-7 percent in 2015. Inflation is expected to remain the low single digits, although some upward pressure may emerge as higher wages and salaries translate into increased demand,” Schneider said.
The IMF agreed with local authorities that sustaining robust growth over the medium term would require continued commitment to policies in support of macroeconomic stability, and structural reforms to enhance productivity and competitiveness.
While hailing the new government’s focus on improving governance and increasing transparency, the IMF voiced concern over the budget deficit of 4.4 percent as challenging” and advised the government to consider contingency measures should revenues fail.
However, Schneider acknowledged the exchange rate did not appear out of line with fundamentals, particularly given the projected improvement in the balance of payments.
Sri Lanka’s rupee depreciated significantly from 129 to 132, hitting a low of 135 in January before regaining stability.
(Xinhua) –
March 5th, 2015 at 3:21 pm
BUSTED!
This is the END of the UNP govt.
My3 should DELAY the election as much as he can.
March 5th, 2015 at 5:51 pm
Hilary Clinton once referred to China as the “US Banker”. Canada and Britain have shamelessly side stepped human right issues and lobbied for the expansion of trade with Beijing. But our Sri Lanka appears to be on a collision course with its former benefactor. This is a recipe for disaster.
March 5th, 2015 at 11:42 pm
This so called accountant has a brain of a mouse.
March 6th, 2015 at 2:33 pm
Rajapakse did what a good leader should do. He did not enjoy the laurels of defeating the Tamil Tigers. He took his leadership to the next logical conclusion
-built an infrastructure that is unparalleled in the sub continent and most importantly allows the Sri Lankan military access to any part of Sri Lanka with a rapid deployment.
-help build 3 deep water ports. the only deep water ports of such magnitude in the subcontinent
-form a strategic alliance with China. that stays valid to this day.
That incurred debt but that debt was based on investments to the nation.
if the IMF has turned down Sri Lanka for cheaper loans then it is the duty of the present government to open up Sri Lanka’s economy to include a greater deal of manufacturing and industrial development in order to create the revenue to pay off that debt while taking the nation to its next logical economic step.