Business Times

IMF: Keen to put Lankan economy on track

By Feizal Samath

OSLO - The International Monetary Fund (IMF) said this week that Sri Lanka’s financial situation hasn’t improved as fast as expected and the Fund was reconsidering (restructuring) its Stand By Arrangement (SBA) programme to help put the economy back on track.

“It’s true to say that the situation in Sri Lanka hasn’t improved as fast as expected. So we are reconsidering this programme as our role is not only to put the economy on track but to take the economic reality into consideration,” said IMF Managing Director Dominique Strauss-Kahn at a news conference in Oslo on Monday during a one-day summit on the jobs crisis and reducing poverty.

He was responding to a question from the Sunday Times, which exclusively covered the historic meeting which brought the International Labour Organisation (ILO) and the IMF together on a common platform to find solutions to a deepening global jobs crisis. Since 2007, some 34 million people are out of work adding to 200 million who are listed as unemployed, according to ILO figures.

The IMF chief said the Sri Lankan situation hadn’t improved due to external reasons and the Fund is in discussions with the government on the way forward. “We are in this process now,” he said.
The Sunday Times asked the IMF and ILO Director-General Juan Somavia, also present at the news conference along with Norwegian Prime Minister Jens Stoltenberg, Liberian President Ellen Johnson Sirleaf, Greek Prime Minister George Papandreou, Spanish Prime Minister José Luis Rodriguez Zapatero and French Finance Minister Christine Lagarde (who all looked intently when the responses were made), as to whether the Fund was lenient towards the government when budget deficit targets were not met.

At the same time, the ILO was told that Sri Lankan trade unions were complaining that the private sector was using the global crisis as an excuse to downsize, reduce wages and restructure.

Responding, Mr Somavia said the Oslo discussion was all about high levels of growth with jobs. “In Sri Lanka’s case we need to have growth with jobs and jobs as the key in economic policy. That’s what’s being discussed between the Fund and the ILO. But the Sri Lanka government should also be doing this,” he said.

Mr Strauss-Kahn recalled that Sri Lanka was in a difficult financial situation having international loans to repay and unable to do so (at the time the IMF was approached for support). “… the political situation and the fight with Tamil Tigers were part of the problem,” he said.

Outside the Sri Lankan issues, the IMF chief told reporters that the Fund and the ILO ‘want to get together to think differently. We have decided to focus more on policies creating jobs and explore the concept of promoting a social protection floor for the most vulnerable.”

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