An Echelon Media Company
Sunday December 4th, 2022

Sri Lanka asks for quick RFI from IMF, India backing for bigger EFF

ECONOMYNEXT – Sri Lanka has asked the International Monetary Fund for a quick access Rapid Finance Instrument (RFI) while India is backing the island to get a bigger Extended Fund Facility (EFF) with more reforms, a government statement said.

RFI is a low access facility with around 100 percent of quota given to countries with high capacity to implement policy reforms where as EFF will help for a long term reform with over 400 percent of the quota.

Sri Lanka does not qualify for the RFI and such funding is given for countries that do not need deep reforms.

Instead EFF comes with a long term disbursements along with reforms that are needed to put the country back into a path of sustainable growth and debts.

Related

What Sri Lanka’s IMF program should look like

Sri Lanka IMF program could be 400-pct plus quota EFF: CB Governor

The request comes as Sri Lankan delegation led by Finance Minister Ali Sabry met the IMF officials in their headquarters in Washington DC a week after the island nation suspended its foreign debt repayments citing it does not have usable foreign reserves.

“Minister of Finance has made a request for a Rapid Financing Instrument (RFI) with the IMF and IMF has subsequently informed Minister Sabry that India had also made representations on behalf of Sri Lanka for an RFI,” the Finance Ministry said in a statement.

“It had been communicated that IMF will consider the special request made despite it being outside of the standard circumstances for the issuance of an RFI.”

In Washington, Indian Finance Minister Nirmala Sitharaman and the top level Indian Economic delegation also met with Ali Sabry at the IMF Headquarters.

Sitharaman has assured Sabry on India’s fullest support to Sri Lanka to move forward and has emphasized on India’s commitment to strengthen the development of the economy in Sri Lanka.

Sitharaman has also affirmed to Minister Ali Sabry that “India will fully support the deliberations of Sri Lanka with the IMF especially on the special request made for expediting an Extended Fund Facility (EFF).” the Finance Ministry said.

If Sri Lanka goes for EFF, analysts say Sri Lanka will be able to get an up to 3 billion loan, while the RFI will see over 700 million US dollar support.

By 2025 Sri Lanka’s IMF loans would fall to around 60 percent of quota, allowing a drawdown of around 470 percent of quota at peak, in a 535 percent access program.

A recent program for Argentina, the archetypal soft-pegged defaulter, got 1200 percent quota access.

Analysts have speculated that a front loaded Stand-by or an EFF may be assigned to Sri Lanka and have suggested that given the monetary instability that had come from flexible-inflation-targeting-with-a-peg in the past a reserve money program should be followed.

(Colombo/April 19/2022)

Comments (3)

Your email address will not be published. Required fields are marked *

  1. Lionel says:

    How can you reform with two idiots still in control and unelected henchman as chancellor.

  2. Maurice de Silva says:

    As long as no member of the Rajapakses touch this money, everything is going to be OK on the long run. They must keep an eye how this money is spent.

  3. Dave says:

    This is where the IMF talks take place.
    Here are two finance ministers from two neighboring countries and their financial experts.
    One finance minister took office a week ago. As the president’s personal lawyer, all his corruption allegations were subverted by fraud and later taken over by the relevant government’s Ministry of Law. He is Ali Sabry.
    The other is the Minister of Finance of over one billion people. She holds a Masters in Economics, Philosophy and Philosophy. She is India’s most successful finance minister after Dr. Manmohan Singh.
    She is the most powerful woman in India and the 37th most powerful woman in the world according to Forbes magazine.
    She is fulfilling her responsibility to provide IMF relief to help her neighboring island nation recover from the economic crisis.
    She is Nirmala Seetharaman.

View all comments (3)

Comments (3)

Cancel reply

Your email address will not be published. Required fields are marked *

  1. Lionel says:

    How can you reform with two idiots still in control and unelected henchman as chancellor.

  2. Maurice de Silva says:

    As long as no member of the Rajapakses touch this money, everything is going to be OK on the long run. They must keep an eye how this money is spent.

  3. Dave says:

    This is where the IMF talks take place.
    Here are two finance ministers from two neighboring countries and their financial experts.
    One finance minister took office a week ago. As the president’s personal lawyer, all his corruption allegations were subverted by fraud and later taken over by the relevant government’s Ministry of Law. He is Ali Sabry.
    The other is the Minister of Finance of over one billion people. She holds a Masters in Economics, Philosophy and Philosophy. She is India’s most successful finance minister after Dr. Manmohan Singh.
    She is the most powerful woman in India and the 37th most powerful woman in the world according to Forbes magazine.
    She is fulfilling her responsibility to provide IMF relief to help her neighboring island nation recover from the economic crisis.
    She is Nirmala Seetharaman.

Paris Club proposes 10-year moratorium on Sri Lanka debt, 15 years of debt restructuring

ECONOMYNEXT — The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis, India’s The Hindustan Times reported.

While the Paris Club has yet to formally reach out to India and China, Colombo has yet to initiate a formal dialogue with the Xi Jinping regime, the newspaper reported on Saturday December 03, inferring that the chances of the International Monetary Fund (IMF) approving its 2.9 billion dollar extended fund facility for Sri Lanka in December now ranges from very low to nonexistent.

“This means that Sri Lanka will have to wait for the March IMF meeting of the IMF before any aid is extended by the Bretton Woods institution,” the newspaper reported.

“Fact is that for Sri Lanka to revive, creditors will have to take a huge hair cut with Paris Club clearly hinting that global south should also take the same cut as global north notwithstanding the inequitable distribution of wealth. In the meantime, as Colombo is still to get its act together and initiate a dialogue and debt reconciliation with China, it will need bridge funding to sustain the next three month before the IMF executive board meeting in March 2023. Clearly, things will get much worse for Sri Lanka before they get any better—both economically and politically,” the report said. (Colombo/Dec04/2022)

Continue Reading

Sri Lanka’s Ceylon tea prices up amid low volumes

ECONOMYNEXT – Sri Lanka tea prices picked up at the last auction in November amid low volumes, brokers said.

“Auction offerings continued to record a further decline and totalled 4.2 million Kilograms, of which Ex-Estate offerings comprised of 0.6 million Kilograms. There was good demand,” Forbes and Walker Tea brokers said.

“In the Ex-Estate catalogues, overall quality of teas showed no appreciable change. Here again, there was good demand in the backdrop of extremely low volumes.”

High Growns

BOP Best Westerns were firm to 50 rupees per kg dearer. Below best and plainer types were Rs.50/- per kg easier on last.

Nuwara Eliya’s were firm.

BOPF Best Westerns were firm to selectively dearer. Below best and plainer teas declined by 50 rupees per kg.

Uva/Uda Pussellawas’ were generally firm and price variances were often reflective of quality with the exception of Select Best Uva BOPF’s which were firm and up to 50 rupees per kilogram dearer.

CTC teas, in general, were mostly firm.

“Most regular buyers were active, with perhaps a slightly more forceful trend from the local trade,” brokers said.

Corresponding OP1’s met with improved demand. Well-made OP/OPA’s in general were fully firm, whilst the Below Best varieties and poorer sorts met with improved demand. PEK/PEK1’s, in general, were fully firm to selectively dearer.

In the Tippy catalogues, well-made FBOP/FF1’s sold around last levels, whilst the cleaner Below Best and cleaner teas at the bottom appreciated. Balance too were dearer to a lesser extent.

In the Premium catalogues, very Tippy teas continued to attract good demand. Best were firm to selectively dearer, whilst the Below Best and cleaner teas at the bottom appreciated

Low Growns

Low Growns comprised 1.8 million Kilograms. Market met with improved demand, in general.

In the Leafy & Semi Leafy catalogues, select Best BOP1/OP1’s were fully firm, whilst the Below Best/bolder BOP1’s were barely steady.

Low-grown teas, farmed mainly by smallholders and exported to the Middle East and Central Asia, are the most sought-after and expensive Ceylon Teas.

Low-grown CTC prices have gained this week to 982.80 per kilogram this week from 934.76 per kilogram last week.

Few Select best BOP1s maintained, whilst best and below best were irregularly lower. Poorer types maintained.

BOPF’s in general, firm market.

FBOPF/FBOPF1’s select best and best increased in value, whilst the below best and bottom held firm.

Selected best BOP1’s maintained, whilst best and below best were irregularly lower.Poorer types maintained.

OP1’s selects best together with best and below best were firm to dearer. Poorer sorts were fully firm.

Medium Growns

BOPF’s, select best gained by 50 rupees per kilogram. Others maintained.

BOP1’s select best dearer by 100 rupees per kg whilst all others moved up by 50 rupees per kg.

OP1: select best gained by 100 rupees per kg whilst all others dearer by 100 rupees per kg.

OP/OPA’s in general, dearer by 50 rupees per kg whilst the poorer sorts were firm.

PEK’s Select best gained by 50 rupees per kg whilst all others maintained. PEK1: In general, dearer by 50 rupees per kg. (Colombo/Dec 04/2022)

 

 

Continue Reading

Sri Lanka Ports Authority East Terminal contractor paid: Minister

ECONOMYNEXT – Sri Lanka’s Ports Authority had paid a deposit for a gantry crane and made the required payment for the contractor to complete building the East Container Terminal, Minister Nimal Siripala De Silva said.

The East Container Terminal, a part of which is already built is being completed as a fully SLPA owned terminal at a cost of 480 million dollars Ports and Shipping Minister de Silva said.

“ECT we are funding with money available in the ports authority,” he said.

“Up to now we have paid an advance for the gantry crane. And for the construction we have paid all the money agreed with the contractor. So that is going on well.”

Sri Lanka is undergoing the worst currency crisis in the history of the island’s soft-pegged (flexible exchange rate) central bank which has created difficulties in funding the project.

“Every penny we collect as dollars we are keeping them separately and utilizing that for the Eastern Terminal work,” Minister de Silva said.

“We are confident that the ECT will be completed within the envisaged time. It is a difficult task in view of the dollar problem.

Banks were also not releasing the dollar deposits of the SLPA earlier but are now doing so, he said.

“Our deposits in banks they have utilized for urgent other national purposes,” he said.

“So they are releasing that money slowly. I am happy that they are releasing that money little by little. So with that we will be able to manage that.”

Continue Reading