A mission from the International Monetary Fund (IMF) was in Sri Lanka this week for its first quarterly review of the US$2.6 billion stand-by arrangement, according to the Assistant Governor of the Central Bank (CB) P.N. Weerasinghe.
The IMF executive board approved the 20 month stand-by arrangement in July 2009 to support the country’s economic reform programme. Immediately following the board’s approval, an amount equivalent to US$322.2 million became available to Sri Lanka with the remaining amounts phased in subject to quarterly reviews.
Dr. Weerasinghe said it is a practice for the IMF to set up an office in the programme country to facilitate correspondence but added he is not sure if an IMF representative office will be set up in Colombo. “Setting up or closing of such an office is a decision entirely made by the IMF for their convenience,” he said. “As part of the cost cutting measures, the IMF has closed some offices including the Sri Lankan office when there was less activity.”
Sri Lanka’s economic reform programme includes cutting the budget deficit to 5% of GDP by 2011, strengthening the country’s international reserve position and allowing for greater exchange rate flexibility.
The total amount of IMF resources made available to Sri Lanka under the stand-by arrangement is 400% of the country’s quota.
It was also announced this week that Sri Lanka issued three year bonds for US$50 million to qualified investors. Dr. Weerasinghe said this was done to roll over the maturing Sri Lanka Development Bonds.