Sri Lanka has decided not to seek a fresh facility from IMF after availing of the assistance earlier to fund its post conflict development drive.

The government in October last year had announced that it would be seeking a $ 1 billion Extended Fund Facility or Budget Support Facility.

The IMF has also indicated that the Fund may not be in a position to consider any direct or indirect budget support to Sri Lanka.

It felt the current improved status of Sri Lanka did not warrant unconventional and exceptional financial support to the Government of Sri Lanka from the IMF, the Central Bank said.

Outlining its decision to not pursue the IMF facility, the Central Bank said Sri Lanka had moved to a more market oriented exchange rate determination regime.

It said the country’s reserves had also increased to a much higher level when compared to the position at the beginning of the Stand-By Arrangement with the IMF.

The stand by facility worth $ 2.6 billion was approved in 2009 and fully disbursed by mid last year was meant to boost Sri Lanka’s dwindling foreign reserves at the end of the military conflict with the LTTE in 2009.

“Sri Lanka’s external reserves have now reached a level of approximately $ 7 billion, from just over $ 1 billion in early 2009 when Sri Lanka commenced the Stand-By Arrangement with the IMF”, the Central Bank said.

The government has been facing criticism from opposition parties which claim the island nation had debts to the tune of SLRS 3 trillion (One Indian rupee equal to 2.3 SLR) as on December end, 2012.

(This article was published on February 12, 2013)
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