IMF was dragging feet in 2020, Sri Lanka provided relief in Pandemic on its own: Minister
ECONOMYNEXT – The International Monetary Fund was dragging its feet in providing support to Sri Lanka in 2020 and the island gave relief to the people and maintained economy without its support during a Coronavirus pandemic, a minister said.
“The request for Covid assistance was made by the government from the IMF early last year at the time of the Covid Pandemic started,”
“But the IMF was dragging its feet in providing that facility.
“Nevertheless, the government managed to effectively provide the necessary relief and support to the Sri Lankan people as well as maintain a framework of sound macro fundamentals even without such support from the IMF.
Minister Cabraal made the statement after an IMF spokesman responded to a reporter’s question about it views on a deal with Sri Lanka initiated last year and a recent 10 billion Yuan (about 1.5 billion US dollar) swap with the People’s Bank of China.
“The IMF’s response to the new that Sri Lanka has been able to secure a SWAP facility of 10 billion yuan (US$1.5 billion) is quite surprising,” Minister Cabraal said.
An IMF spokesman told reporters that the agency had failed to reach agreement “on how to fulfill the key requirements for what could be a rapid financing instrument (RFI) which would include policies to continue ensuring debt sustainability to address the balance of payment challenges…”
“We continue to closely monitor these economic policy financial developments in Sri Lanka including the recent agreement on a swap line with the People’s Bank of China,” he said.
Sri Lanka last week said the PBOC had approved a 1.5 billion US dollar swap, which it would use if needed.
Sri Lanka’s soft-pegged central bank has gone to the IMF around 16 times for balance of payments support as well a structural adjustment programs.
Soft-pegs that print money and target the exchange rate get into balance of payments trouble, unless restraint is exercised in time. (Colombo/Mar15/2021)