IMF team to visit Sri Lanka on review mission before final SBA disbursement

A team of officials from the International Monetary Fund (IMF) is to arrive in Sri Lanka next week to review the country’s economic conditions before disbursing the final tranche of the US$ 2.6 billion Stand-By Agreement (SBA), Government officials said.

The review is scheduled to commence on 4 June, Central Bank Governor Ajith Nivard Cabraal has said earlier.

The IMF would consider the disbursement of the final US$ 400 million tranche of the SBA after considering the representations by the review board.

The Executive Board of IMF in April approved an extension of the arrangement period to 23 July 2012, to allow time for the completion of the eighth and final review.

The IMF completed the seventh review in April this year and with that has granted US$ 2.13 billion to Sri Lanka under the SBA approved on 24 July 2009.

The final two tranches of $ 400 million each are disbursed at a higher 3% interest rate while the rest of the loan was disbursed at 1.1%.

After the final tranche is received the government plans to request another loan of US$ 500 million, Senior Minister of International Monetary Cooperation Dr. Sarath Amunugama has said.

Approving the seventh tranche, Deputy Managing Director of IMF Min Zhu said although the adjustment measures implemented by the Sri Lankan authorities have placed the economy on a more sustainable trajectory, it will take time for the new monetary and exchange rate regime to become fully established, and the authorities will need to stand ready to adjust policies further to stabilise external reserves, especially if the global environment becomes less favourable.

Sri Lanka’s economy recorded a high growth rate of 8.3 per cent for the second consecutive year in 2011 but for 2012, the Central Bank has lowered the projection to 7.2 per cent growth rate.