The Committee on Public Finance (CoPF) chaired by MP (Dr.) Harsha De Silva, three days ago (23) stressed that the aim of the committee regardless of allegiances will be to stand by the reforms promulgated by the International Monetary Fund (IMF) and being executed by the Central Bank of Sri Lanka (CBSL).
This comes in the wake of a CBSL confirmation that they are confident of having an actual IMF first tranche disbursement within the 1 st Quarter of 2023. CoPF queried the severe social implications of such steep mechanisms to adhere to IMF conditions.
The CBSL responded by confirming that the IMF are wary about the social impact to vulnerable communities and has invoked certain safeguards such as expenditure ceilings to negate those effects.
When queried as to the adverse effects of market contraction due to the stifling interest rates, the CBSL acknowledged that those measures have been taken to limit growth in order to prevent the need for greater foreign exchange given the dwindling amount currently in the country. They went on to reiterate that with a cash infusion via the Extended Fund Facility (EFF) from IMF, interest rates can once again be relaxed, and the market will once again have an opportunity to expand. When the question of alternatives to an IMF bailout were reached, the CB stressed that no other international financing/funding institute is willing to partner with Sri Lanka on its debt management unless they see an IMF partnership materialise first. With the ostensible debt treatment measures that an IMF program accompanies, it reassures international agencies of Sri Lanka’s credibility to once more partner with the country for future ventures including debt management. This is why the CBSL stresses that it is imperative for Sri Lanka to lock in the bailout.
State Minister Suren Raghavan, MPs Anura Priyadarshana Yapa, Rauf Hakeem, Chandima Weerakkodi, Harshana Rajakaruna, Vijitha Herath, Mayantha Dissanayake and Madhura Withanage were present at this committee meeting.