Sri Lankans are eagerly waiting for the arrival of the International Monetary Fund (IMF) staff team in a progress review mission to Colombo in a month’s time as they are not sure about the government’s track record of reform program.
The fiscal side of the reform package has been implemented at a terrible cost to ordinary people in the country derail eminent economists said adding that debt restructuring arrangements are yet to be undertaken.
Until that is completed and the rest of IMF’s agenda implemented it would be premature to celebrate the little benefits achieved so far from the recovery program.
They noted that what is yet to be accomplished is far more challenging than has been implemented.
The Washington-based lender approved a nearly US$3 billion bailout for crisis-hit Sri Lanka in March. The Asian island is struggling with its worst financial crisis in over seven decades, triggered by a severe shortage of foreign exchange.
The first review will take place from September 14 through the 27 and considers the programme’s performance until end-June, and if approved by both the staff and the executive board, would allow a disbursement of around US$338 million.
Sri Lanka’s programme is planned to deliver 71 outcomes by the end of September. Presently, as of the end of July, 35 are “met” and 14 are “unknown”. There are 8 more that are “not met”
That means the ratio of unknowns to knowns is about 33% — rather high for a critical economic recovery programme
These “unknowns” primarily encompass quantitative commitments, such as tax revenue and primary balance targets. These are not mere numbers but essential indicators of the improvement in Sri Lanka’s fiscal position.
Sri Lanka has been in 16 IMF programmes since 1966 and failed to complete almost half of them (7 of 16). Even past programmes that were completed saw huge departures from the original plans, which were excused by the IMF to move the programme forward.
State Minister of Finance Shehan Semasinghe says that receiving the second instalment of the extended fund facility provided by the International Monetary Fund will give a positive message to local and foreign investors about the future economy of Sri Lanka.
The State Minister points out that the reason for this is that the measures have been taken to implement the proposals presented by the International Monetary Fund, including fighting corruption, maintaining financial discipline, and creating transparency.
“The economy of this country has entered the right path. Inflation is coming down and the rupee is becoming stable.
He said that the government expects the cost of living to come down further after the implementation of the domestic credit optimization program. Also, receiving the second installment of the International Monetary Fund will be more convenient.”
He further mentioned that as a country with anti-corruption laws, a country with transparency, and a country with financial discipline, Sri Lanka has entered the path of receiving the second instalment of the Fund facility of the International Monetary Fund.
