Govt. expects to reach IMF staff level agreement for loan soon

Thursday, 28 April 2016 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Sri Lanka is expected to reach a staff level agreement with the International Monetary Fund (IMF) for a loan as early as this week, the Central Bank Deputy Governor said on Tuesday.

“On the technical level we have come to an agreement on the fiscal and monetary reforms. Hopefully we should be able to finalise it within if not a couple of days, probably within this week,” Nandalal Weerasinghe told reporters in Colombo. “I can’t state an exact date, but we are very close to reaching an agreement.”

Sri Lanka is seeking a $1.5-billion loan from the IMF to tide over its finances. The global lender on 11 April said it expected to complete negotiations with Sri Lanka for a three-year loan program within two weeks.The Government share will be mostly used to cover taxes including VAT, land acquisition and project management costs.

Under the latest Cabinet paper approval was given to negotiate funding from the China Development Bank and arrange financing from a local bank if 100% of the total value of the contract is not available.

The Thambuttegama water supply project is larger with the China Development Bank expected to provide $70.6 million along with Rs.2 billion. The Government share of Rs.4.1 billion will again be used for taxes and other rudimentary purposes.

Both the water projects aim to reduce chronic kidney disease in Sri Lanka and come with Treasury guarantees as they are under the Cabinet’s decision to allow for foreign financing to promote water supply projects.