ECONOMYNEXT – Sri Lanka has sought technical support from the International Monetary Fund and a mission is likely to arrive, Finance Minister Basil Rajapaksa said.
“We have not officially done anything,” he told reporters at a forum in Colombo Wednesday when asked whether a decision has been made to go for an IMF program.
“But we have written to them and sought specialist advice from them. The IMF is an international institution set up to give advice to countries that are going through crisis situations.
“We also need funds. Japan has agreed to give money.
“So one of these days they will come and give us advice about things that we do not know. Whether we take the advice is not something I can do alone. Before we go there we need to know what they give. We get specialist knowledge and are looking to find out what is the suitable system for this country. Before we go to any bank to get a housing loan also we need to know.”
He did not elaborate on the mission.
Central Bank Governor Nivard Cabraal said in a twitter.com message Thursday morning that it was a technical assistance mission (TA) mission.
Finance Minister's comment yesterday (2) re."#SriLanka informing @IMFNews to provide #expert advice on #economic situation" is about a routine Technical Assistance Program on Macro-Fiscal capacity building for MOF's new Macro-Fiscal Unit. Nothing else. @RealBRajapaksa @CBSL #lka
— Ajith Nivard Cabraal (@an_cabraal) February 3, 2022
An IMF team was in Sri Lanka recently for annual Article IV consultations which had been delayed.
Sri Lanka officials have previously said they had the IMF as an option and was trying other methods to solve the external problem as Washington based lender would request a currency depreciation and spending cuts.
Several cabinet ministers have said publicly that Sri Lanka should consider going for an International Monetary Fund program as forex shortages disrupted supplies of various goods.
There has been a softening of attitude towards the IMF among ruling party politicians in recent weeks. Minister Dullas Alahapperuma last months said IMF should not be demonized as it had helped the country in the past.
The matter had been discussed at the cabinet on several occasions.
Sri Lanka’s foreign reserves have fallen sharply due to liquidity injections made to keep interest rates down as economic activity recovered.
Sri Lanka’s imports are soaring amid a large budget deficit and recovering private credit. (Colombo/Feb02/2022)