Adequate macroeconomic policy framework must for WB funding


A government spokesman said nearly two weeks of technical discussions with the International Monetary Fund (IMF) were successfully concluded on Tuesday (24).

Prime Minister (PM) Ranil Wickremesinghe and his special representative, former Secretary to the Ministry of Finance Dr. R.H.S Samaratunga, also participated in the concluding discussions.

These discussions had taken place with the heads of the IMF, Central Banks and the Ministries of Finance and their representatives.

Considering the progress made, policy level discussions are scheduled to begin within the next week.

At the discussions to follow, the two sides will reach an agreement on the minimum criteria to be met for signing of the staff level agreement with IMF.

The government has already taken a series of measures to reduce costs and losses by introducing pricing and cost cutting reforms. Necessary steps have also been taken to reform fiscal and monetary policy.

The government plans to present its immediate economic reform measures to the country through the upcoming mini-budget.

In its Article IV consultation report, the IMF said that Sri Lanka faces ‘solvency’ issues. Its ‘debt overhang’, the report said will impede growth and threaten its macro-economic stability.

Meanwhile, the World Bank yesterday issued the following statement on Sri Lanka: “Recent media reports have inaccurately stated that the World Bank is planning support for Sri Lanka in the form of a bridge loan or new loan commitments, among other incorrect assertions.

“We are concerned for the people of Sri Lanka and are working in coordination with the IMF and other development partners in advising on appropriate policies to restore economic stability and broad-based growth. Until an adequate macroeconomic policy framework is in place, the World Bank does not plan to offer new financing to Sri Lanka.

We are currently repurposing resources from previously approved projects to help the government with some essential medicines, temporary cash transfers for poor and vulnerable households, school meals for children of vulnerable families and support  for farmers and small businesses.”

By Ishara Gamage