Central Bank Governor says in rediffusion SL needs reforms with or without IMF

While keeping his radio silence and switching on his ‘rediffusion’ , Central Bank Governor Nandalal Weerasinghe said with or without the International Monetary Fund (IMF), Sri Lanka needs to bring in reforms to correct the economy and put it on a sustainable footing.

“As an economy, we need medium- to long-term reforms to restructure the economy,” he said, speaking at the CA Sri Lanka’s Annual Research Symposium recently.

The Central Bank Governor also set the record straight on bilateral creditor discussions, citing that it had been miscommunicated disputing the announcement made at the recent cabinet media briefing. .

“During the post-Cabinet meeting media briefing, it has been informed that we have concluded the negotiations with bilateral creditors Paris Club, China, India and Japan.

“I saw some reports in the media as well. I think it was probably a miscommunication. We have not concluded discussions, but have made good progress. We are in the process of completing it. We intend to obtain the financial assurance somewhere in January,” he stressed.

Weerasinghe said once the financial assurance is obtained the next step is to present it to the IMF along with our macroeconomic policies. “On that basis, we will be able to stimulate the economy in the short term. But of course, we need long-term reforms and correct policies to fix the imbalances,” he added.

The third meeting between bilateral creditors and the Government concluded last Thursday in Colombo.

“We appreciate the progressive and constructive engagements,” State Minister for Finance Shehan Semasinghe said. “We wish to reiterate that we will maintain an equal, comparable and transparent debt treatment policy,” he said via a tweet.

Sri Lanka’s outstanding debt due to bilateral creditors’ amount to US $ 14 billion of which 52% is to China. Others include Japan and India.

Lanka held the third meeting with its bilateral creditors on debt restructuring, State Finance Minister said, as the island nation’s $2.9 billion International Monetary Fund (IMF) loan has been delayed amid agreement among its creditors are yet to be seen.

Sri Lanka could not hold the third meeting with bilateral lenders scheduled for November 17 citing the creditors need some clarification before the next meeting.

The creditors include geopolitical rivals China and India. No country has so far fully agreed with any of the debt restructuring system, government sources have said.

“Central Bank Governor Nindalal said Sri Lanka is now eyeing the January deadline for the IMF board approval to secure a $2.9 billion loan.

Officials say lack of consensus among Sri Lanka’s creditors over debt restructuring and some pending reforms in loss-making state owned enterprises (SOEs) have resulted in the delay.

Sri Lanka held its first meeting with bilateral creditors on October 14 and the second on November 03, though no consensus has been reached. President Ranil Wickremesinghe’s administration has said that it has been negotiating with India and China for debt restructuring separately.