Government not given up on balance IMF funds

The Government yesterday told Parliament that it hasn’t given up on the IMF’s Stand-By Arrangement (SBA) program and receipt of the remaining $ 800 million out of $ 2.6 billion facility would require the signing of a fresh Letter of Intent.

This disclosure came from Senior Minister Dr. Sarath Amunugama in response to an adjournment question in Parliament by UNP MP and its chief spokesman on the economy Dr. Harsha de Silva with regard to the Government’s stand on the IMF program, as exclusively reported by the Daily FT yesterday.

Apart from Dr. Amunugama, Petroleum Industries Minister Susil Premajayantha also answered on behalf of the Government during the debate which many described as well conducted with much dignity from both sides of great divide in Parliament.

Whilst the debate took place late evening, the new willingness to keep the IMF option open was reinforced earlier in the day when Central Bank announced a near free-float of the rupee saying it will intervene on quantity than on price. The move saw the exchange rate to the dollar to almost Rs. 116.

IMF has said greater exchange rate flexibility was required if it were to release the remaining $ 800 million tranche under the SBA.

Dr. de Silva had previously called for greater freedom for the market to determine the true value of the rupee apart from foolishness of any moves to tap global debt markets to raise funds ignoring the relatively concessionary facility from the IMF.

The Government had said sharp rise in oil prices due to higher demand for heating energy in the midst worst ever cold in Europe as well as sanctions on Iran supplies was the biggest concern in allowing a free float of the rupee.