Colombo: The second tranche of the US$2.9 billion IMF bailout package for cash-strapped Sri Lanka will be finalized within the next month, the central bank governor said. Nandlal Weerasinghe Said on Friday. The government is expecting about US$330 million as the second tranche of a US$2.9 billion 4-year bailout, following the first tranche extended in March. Extended Fund Facility (EFF) to support Sri Lanka’s economic policies and reforms.
Sri Lanka faced its worst economic crisis in history when the country’s foreign exchange reserves became extremely low and the public took to the streets to protest against shortages of fuel, fertilizers and essential commodities.
“We are making good progress with the first review. We will approve the program. This requires assurances from bilateral lenders. The official lender committee will be forthcoming,” the governor said. Central Bank of Sri Lanka (CBSL) Weerasinghe told reporters.
“With this, additional fund support will come from Asian Development Bank (ADB) and World Bank. And IMF budget support will help in budgetary financing of the government from next month,” he said.
An IMF review in September highlighted revenue shortfalls and other shortcomings in meeting the program’s goals, including the non-finalization of external debt restructuring.
Weerasinghe said that the work of improving the economy has started. “There has been a sustained decline in GDP growth on a quarterly basis till the second quarter of this year. What we will see in the third and fourth quarters will be marginally positive. The economy will be slightly negative this year.”
The central bank governor expects growth to be negative at around 2 percent in 2024.
Meanwhile, the Monetary Policy Board of the Central Bank in its meeting held on Thursday decided to reduce the Standing Deposit Facility Rate (SDFR) and Standing Loan Facility Rate (SLFR) of the Central Bank by 100 basis points (bps). 9.00 percent and 10.00 percent respectively.
“The Board reached this decision after a careful analysis of current and expected developments in the domestic and global economy, with the objective of achieving and maintaining inflation at the target level of 5 per cent over the medium term while enabling the economy.” “Reach potential levels and remain stable,” CBSL said in a statement on Friday.
The Board observed that this cut in policy interest rates, along with the monetary policy measures taken from June 2023, has effected sufficient monetary easing to stabilize inflation over the medium term.
Sri Lanka declared bankruptcy in April 2022, leading to the ouster of the Gotabaya Rajapaksa government in the middle of the year. The island nation announced its first sovereign default since gaining independence from Britain in 1948.
Rajapaksa and his fiscal hierarchy were found responsible for the economic slowdown by the Supreme Court in fundamental rights petitions.
Sri Lanka faced its worst economic crisis in history when the country’s foreign exchange reserves became extremely low and the public took to the streets to protest against shortages of fuel, fertilizers and essential commodities.
“We are making good progress with the first review. We will approve the program. This requires assurances from bilateral lenders. The official lender committee will be forthcoming,” the governor said. Central Bank of Sri Lanka (CBSL) Weerasinghe told reporters.
“With this, additional fund support will come from Asian Development Bank (ADB) and World Bank. And IMF budget support will help in budgetary financing of the government from next month,” he said.
An IMF review in September highlighted revenue shortfalls and other shortcomings in meeting the program’s goals, including the non-finalization of external debt restructuring.
Weerasinghe said that the work of improving the economy has started. “There has been a sustained decline in GDP growth on a quarterly basis till the second quarter of this year. What we will see in the third and fourth quarters will be marginally positive. The economy will be slightly negative this year.”
The central bank governor expects growth to be negative at around 2 percent in 2024.
Meanwhile, the Monetary Policy Board of the Central Bank in its meeting held on Thursday decided to reduce the Standing Deposit Facility Rate (SDFR) and Standing Loan Facility Rate (SLFR) of the Central Bank by 100 basis points (bps). 9.00 percent and 10.00 percent respectively.
“The Board reached this decision after a careful analysis of current and expected developments in the domestic and global economy, with the objective of achieving and maintaining inflation at the target level of 5 per cent over the medium term while enabling the economy.” “Reach potential levels and remain stable,” CBSL said in a statement on Friday.
The Board observed that this cut in policy interest rates, along with the monetary policy measures taken from June 2023, has effected sufficient monetary easing to stabilize inflation over the medium term.
Sri Lanka declared bankruptcy in April 2022, leading to the ouster of the Gotabaya Rajapaksa government in the middle of the year. The island nation announced its first sovereign default since gaining independence from Britain in 1948.
Rajapaksa and his fiscal hierarchy were found responsible for the economic slowdown by the Supreme Court in fundamental rights petitions.
(Tags to translate)World Bank(T)Sri Lanka crisis(T)Sri Lanka(T)Nandlal Weerasinghe(T)IMF(T)GDP(T)Extended Fund Facility(T)Central Bank of Sri Lanka