Tuesday, January 31, 2023

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IMF technical team to engage with CB on macroeconomic modeling

International Monetary Fund’s (IMF) technical team is in Colombo soon to work with the Central Bank on macroeconomic modeling and forecasting relating Sri Lanka’s economic programme supported by them, IMF sources disclosed.

In this context, a special meeting was convened at the Central Bank by IMF Country Representative with a group of selected journalists to seek their inputs on the most effective way to communicate complex economic policy-making issues.

However no specific policies were discussed at this meeting IMF sources said.

Responding to Business Times query on IMF board approval timing Peter Breuer, Senior IMF Mission Chief for Sri Lanka noted that the initial disbursement under the Extended Fund Facility (EFF) is available at board approval, which is contingent on the implementation of prior actions by the authorities and the progress with discussions with creditors on restoring debt sustainability.

It specifically requires receiving assurances from Sri Lanka’s official creditors to restore debt sustainability and the authorities making a good faith effort to reach a collaborative agreement with private creditors, he added.

Central Bank Governor Nandalal Weerasinghe told a recent media conference if Sri Lanka misses the board approval in December it plans to appear before the IMF Board in January 2023 and is optimistic that it would shortly receive assurance from bilateral creditors.

When asked to comment on CB Governor’s assertion, Masahiro Nozaki, IMF Mission Chief for Sri Lanka pointed out that It is difficult to predict the timeline for the board approval, as the process of debt discussions takes time.

All parties who are involved in the process should move expeditiously, so that Sri Lanka can emerge from the crisis as quickly as possible., he said adding that Sri Lanka’s soonest return to sustainable growth would help to mitigate the worsening humanitarian crisis and also help restore the country’s repayment capacity

he International Monetary Fund will provide Sri Lanka $2.9 billion over four years to help salvage the country from its worst economic crisis under a preliminary agreement the agency announced

The arrangement will work to restore financial and macroeconomic stability and debt sustainability as well as unlock the country’s growth potential, the IMF team visiting Sri Lanka said in a statement.

The package is contingent on approval from the IMF management and executive board, as well as on receiving assurances from Sri Lanka’s creditors, which include countries like China, India and Japan, that debt sustainability will be restored.

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