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IMF weighs cyclone disaster financing for rebuilding
View(s):By Kapila Bandara
Sri Lanka has sought financial assistance of about US$200 million from the IMF, President Anura Kumara Dissanayake told Parliament Friday, to recover and rebuild from the unprecedented cyclone devastation.
President Dissanayake said he expects a disbursement this month.
As Finance Minister, he also detailed substantial increases in spending on immediate financial support for people. He has fiscal breathing room for the expenditure. For immediate spending Rs 30 billion is available. The cyclone’s destruction of homes (more than 5,000 destroyed and 55,747 partly damaged), schools, small businesses, agriculture, livelihoods, social infrastructure, in addition to lives is unprecedented.
The IMF said in Washington Friday the request is being considered. In an announcement, the IMF said that Special Drawing Rights of 150.5 million, about “26% of the quota or about US$200 million”, have been requested under the rapid financing instrument. It is repayable in 3-5 years, IMF explanations show.
Special Drawing Rights is an international reserve asset, the value of which is based on a basket of five currencies including the US dollar, the euro, yen, and pound sterling. Holders of the asset can exchange SDR for currency. The biggest weighting in the SDR basket is to the US dollar and the euro has the second biggest weighting. As at December 5, the value of the US dollar in terms of the SDR is 1.363560, rounded to six digits. Exchange rates are available daily and posted every 20 minutes Monday to Friday.
There are two windows under which funds are available — large natural disasters and “food shock’’, at a time of “acute food insecurity’’. This window has expired.
Prabath Chandrakirthi, commissioner general of essential services, has estimated up to US$7bn economic loss, which appears on the high side. But some estimates suggest less than Rs 400bn annual loss. One percent of GDP would amount to US$98.9 million based on the 2024 economic output of US$98.98 billion at current market prices.
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