ECONOMYNEXT – Sri Lanka’s President Gotabaya Rajapaksa has met a team from the International Monetary Fund who are in the island to negotiate a bailout involving tighter monetary and fiscal policies and a debt re-structuring.
The IMF mission was led Deputy Director of IMF’s Asia Pacific Department Anne-Marie Gulde. The IMF has also appointed senior mission chief Peter Breuer, who is Chief of the Debt Capital Markets Division, Monetary and Capital Market Department of the IMF.
IMF’s Mission Chief for Sri Lanka Masahiro Nozaki, Resident Representative for Sri Lanka Tubagus Feridhanusetyawan had also met President Rajapaksa.
“IMF representatives briefed the President regarding the preliminary round of discussions heldwith the Prime Minister, the Ministry of Finance, the Central Bank and other economic authorities and experts as well as regarding the current situation,” his office said in a statement.
“The delegation reaffirmed their commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies.
“The President elaborated on the current economic situation and expressed his gratitude to the delegation for their support to Sri Lanka during difficult times.”
The IMF was invited to Sri Lanka at the request of President Gotabaya Rajapaksa at a time when state economists were still supporting ‘stimulus’.
Stimulus or money pritning became a fad during the Coronavirus crisis and was endorsed by the IMF and major reserve currency central banks also engaged in the practice creating a ‘hangover’ in the form of high inflation.
After the Fed fired a massive commodity bubble food prices are high around the world and Mercantilists are now claiming there is a ‘food crisis’ s just as they claimed at the height of the Greenspan-Bernanke bubble in 2008.
Sri Lanka defaulted on the its foreign debt after 7 years of aggressive monetary stimulus, involving call money rate targeting, real effective exchange rate targeting and output gap targeting, including with fiscal stimulus (tax cuts) which led to monetary instability and higher foreign borrowings.
The country is now trying to re-structure its foreign debt but is also attempting to borrow a whopping 6.0 billion dollars in 2022 amid enhanced monetary instability. (Colombo/June24/2022)