IMF yet to receive request for SDR financial support
Despite assurances that Sri Lanka has won approval to receive International Monetary Fund ( IMF) funding from a new facility, the IMF is still to receive a request from Sri Lanka to consider the approval of the Special Drawing Rights (SDR) Facility which is a unique instrument that would benefit all its member countries, a fund official said on Friday.
In in a public statement issued this week, Central Bank Governor W. D. Lakshman noted that “inflows expected to the Central Bank include the SWAP facility of USD 250 million from the Bangladesh Bank expected in July 2021, the SAARC Finance SWAP facility from the Reserve Bank of India of USD 400 million expected in August 2021, and the special SWAP facility of US$ 1000 million being negotiated with the Indian counterpart.”
He also noted that “these are in addition to the receipt of around $800 million under the IMF SDR allocation expected in August 2021”.
Responding to a Business Times query via email on this government assurance, IMF Mission Chief Masahiro Nozaki categorically reiterated on Friday July 2 that they have not received a request for IMF lending from Sri Lanka recently, but stand ready to discuss options if requested.
The earlier request for emergency financial support under the Rapid Financing Instrument ( RFI), made in April 2020, did not move forward. There were some discussions but these did not reach understanding on how to fulfill key requirements for the RFI, which include policies to continue ensuring debt sustainability, he confirmed.
On June 25, the IMF Board discussed a proposal for a new SDR allocation totaling US$ 650 billion based on the IMF staff ’s assessment of long- term global reserve needs.
As noted by Gerry Rice, Director of IMF Communication Department, , at his press briefing on June 24, if all procedures including the final Board of Governors approval are completed, the general SDR allocation would become effective toward the end of August, he explained .
This is a general statement made by him with regard to all member countries and it has no particular reference to Sri Lanka.
The Special Drawing Right (SDR) is an international reserve asset created by the IMF in 1969. A general SDR allocation is a way of supplementing IMF member countries’ foreign exchange reserves, allowing members to build such reserves.
It is a unique instrument that would benefit all IMF member countries including Sri Lanka. Once approved, the new SDR allocation will be distributed, unconditionally, to all members that participate in the SDR Department according to their quota shares. Sri Lanka’s quota share is 0.12 percent, he explained.
The RFI, which provides rapid assistance to countries with urgent balance of payments need, is another example of IMF lending, he disclosed.
The earlier request for emergency financial support under the Rapid Financing Instrument (RFI), made in April 2020, did not move forward.