by Buddhika Samaraweera in The Morning, Dec 22, 2022
The Government of Sri Lanka (GoSL) has admitted that the process of obtaining the approval of the International Monetary Fund (IMF) Board of Directors for the desperately needed Extended Fund Facility (EFF) to provide funding for Sri Lanka may stretch beyond January 2023.
Speaking on the Ada Derana Big Focus programme yesterday (21), State Minister of Finance Shehan Semasinghe said that the Government is however attempting its best to reach the relevant agreement within the first quarter of next year.
“The first step regarding IMF assistance to Sri Lanka was taken in March 2022. Then, there was a big upheaval and instability. By September 2022, a staff-level agreement was reached between the IMF and the Government. That agreement is what is constantly being talked about in Parliament. The Opposition is querying as to why it is not being tabled in Parliament. However, the final approval has to come from the IMF Board of Directors, and only then will the final agreement be reached. By that time, we will inform both Parliament and the people about the agreement.”
When queried regarding the agreement that was expected to be reached with the IMF in January, he said that the staff-level agreement between the IMF and the Government will translate into an IMF programme once the former agreement is signed. He said that there are several conditions that should be fulfilled to reach the Board-level agreement, adding that the Government has currently fulfilled almost all such conditions by obtaining the support of Parliament.
“What we have left to complete now is the debt restructuring process. Before entering into an agreement with us, the IMF needs assurances from creditors that they will support us in restructuring debt. We have no problem obtaining this support, and all creditors have discussed this with us. The Ministry of Finance and the Central Bank of Sri Lanka have conducted three rounds of discussions with the relevant parties and they are currently exchanging the relevant information and data. We are currently holding discussions with the Paris Club and countries such as Japan, India, and China. This process is very complex,” added Semasinghe.
When queried as to whether the relevant process would extend beyond January 2023 in the event of a creditor calling for further discussions, he said: “It can go further, but the Government is making its best effort to reach the necessary agreements in the first quarter of 2023. We believe that we can do it. Looking at the interest of the relevant parties in these discussions, and their sharing of information and data, we will be able to make this happen.”
The IMF mission that visited Colombo in August to continue discussions on IMF support for Sri Lanka and the authorities’ comprehensive economic reform programme stated in September that a staff-level agreement had been reached to support Sri Lanka’s economic policies with a 48-month arrangement under an Extended Fund Facility (EFF) of $ 2.9 billion.
Meanwhile, Sri Lanka Podujana Peramuna Chairman and Opposition MP Prof. G.L. Peiris said on Tuesday (20) that the IMF had said that a people’s mandate was needed to assist Sri Lanka with financial provisions, and that the relationship between the Government and the people will be an essential factor in deciding if the IMF can maintain an effective relationship with Sri Lanka. He said that such a mandate would be symbolised by elections that are due to be held, such as the Local Government (LG) election. If these elections are not held on time, he said, it will be very difficult for the IMF to deal with Sri Lanka, as it has to take into account the opinions of nearly 190 IMF member nations in order to provide financial assistance to any country.
https://www.themorning.lk/articles/2lffNh1zLgV9yE9Arsrd
