We can now manage without further IMF help – Amunugama

By Cheranka Mendis

A top senior minister yesterday declared that Sri Lanka’s financial health was strong enough to move on without using the remainder of IMF support.

“With an increasing foreign reserve base and a stable exchange rate, the country can now temporarily dismiss the next few disbursements of the standby loan of IMF. The government is now looking at trying to reschedule the loan facility,” Senior Minister of International Economic Cooperation Dr. Sarath Amunugama said yesterday.

“We have so much in stock,” he added in his speech at the 2011’s first luncheon meeting of the AMCHAM Sri Lanka.

In a bid to cushion the foreign reserves situation the Government in 2008 opted for IMF’s Stand-By Arrangement (SBA) worth US$ 2.6 billion and so far Sri Lanka has drawn US$ 1.2 billion

Dr. Amunugama suggested that Sri Lanka can now do without the IMF funds which previously helped boost reserves as well as Sri Lanka’s image in the global investor market.

“Our inflation rate is only five per cent, a successful mark after the 25 per cent inflation recorded two to three years ago. Foreign reserves now stand at USD 6.5 billion, enough for the next six month imports to the country,” he said. “Now we have money to play around a little bit. It is a rare luxury but one that we can now be happy with,” Dr. Amunugama said.

He stated that with an average six per cent growth rate in the past and a eight per cent GDP growth as achieved in 2010, Sri Lanka is now in the phase of change as the country readies herself to celebrate the 63rd anniversary of independence.

He claimed that within the next three to four years maintaining a double digit growth in the country would become a possibility.

Affirming that there are three “absolutely fundamental” aspects for rapid growth, Amunugama listed out that safety and security, investment in infrastructure and macro-economic policies were the core principles of growth in the country.

Up to about five years ago, Sri Lanka lacked the emphasis on infrastructure, which is a bedrock on which wealth can grow, he said. “A country must invest boldly, heavily and freely in infrastructure. This is a lesson that could ideally be learnt by examining the growth and development of India and China among others.”

Amunugama who also claimed that Sri Lanka has had no power cuts within the past three years, despite the Government and the Ceylon Electricity Board’s (CEB) repeated warnings of power cuts that flew in almost on a regular basis within the past two years.

He claimed that with the Norochcholai power plant being integrated into the national system, an additional 300 mega watts of power will be available for use. However he stated that the cost of power could come down, “maybe we can take the cost down more.”

Answering a question posed by an AMCHAM Sri Lanka member on emergency law that is extended on a monthly basis in parliament and its controversial image against Sri Lanka being the most secure in the world, Amunugama stated that the government is the best judge of how public security can be implemented.

He stated that only a few sections of the particular law was being practiced currently and that more time was needed to “stabilise” the status after the ending of the terrorism situation in 2009. “These are the activities and the realities of keeping the city safe,” Senior Minister Amunugama added.