Govt. mulls $ 1 b budgetary support from IMF

Saturday, 5 January 2013 00:00 -     - {{hitsCtrl.values.hits}}

By Nisthar Cassim

The Government is keen to seek IMF financing of up to $ 1 billion as Budgetary support, Finance Ministry Secretary Dr. P.B. Jayasundera revealed yesterday.

At a briefing for journalists, the Treasury Chief however said there was no final decision on the exact quantum of financial assistance to be sought from the IMF but the Government was discussing a fresh program.

In this connection, an IMF team is due in Sri Lanka next month and discussions will also cover the multilateral donor’s annual Article 4 consultations.

Unlike the previous IMF support – the US$ 2.6 billion via a Stand By Arrangement (SBA) to boost reserves with the Central Bank – the new arrangement if successfully concluded will be for Treasury as it is in support of the Government’s Budget program.

Dr. Jayasundera said a two-year program is being contemplated and IMF funds will be for financing the Government’s public investment program.

“We no longer require SBA-type support as we have adequate reserves. But we have told all donors, including the IMF, the World Bank, and the ADB, that we prefer program loans. The Budget has provisions for donor financing and if we can secure satisfactory terms and conditions, we will consider meeting the requirements via IMF financing,” Finance Secretary added. This will also reduce the requirement of domestic borrowing of the Government.

He also said that following the successful conclusion of the SBA, the first-ever IMF program to be completed by Sri Lanka, the Government was keen to take this relationship with the Fund further. “In that context we welcome IMF support,” Dr. Jayasundera said.

“We look forward to discussing the next program with the Government and the Central Bank during the upcoming mission in February,” IMF Resident Representative Koshy Mathai had told Reuters yesterday.

Dr. Jayasundera also told journalists yesterday that despite very challenging times locally and globally last year, Sri Lanka had managed itself well. He estimates the economy to have grown by 6.5 or 6.75% in 2012, whilst he was also emphatic that the Budget deficit was likely to be around the targeted level of 6.2% or slightly above.

Noting that the economy would rebound in 2013 to achieve an estimated growth of 7.5%, he added the Government was also firmly committed to achieving the targeted 5.8% Budget deficit in 2013.